VCCircle

SAIF picked up the stake in these two firms from open market sales in late 2008 to early 2009.

Private equity firm SAIF Partners has exited its investments in IT services firm MindTree Ltd and engineering firm Thermax Ltd, earning returns of over 2x in both deals.

The Asia-focused private equity firm completed the exit in MindTree on Thursday, selling a major chunk of its holding for about $20 million (Rs 96 crore).

SAIF, which held 2.60% stake in Thermax and 4.97% stake in MindTree at March end 2009, sold its interest through various bulk deals since March this year, an official from the PE firm told VCCircle.

SAIF picked up the stake in these two firms from open market sales in late 2008 to early 2009. While the investment in MindTree was around $12 million (Rs 57.6 crore), the stake in Thermax was picked up for roughly $15 million (Rs 72 crore). SAIF has also picked up stakes in electrical equipment company Havells India (4.83%) and Indian Hotels Company (1.81%) since last year.

There has been a secular trend of private equity funds picking up stakes in the open markets in listed Indian companies over the last year, making the most of the depressed markets. With the post-election rally and markets hitting new highs, many of them have started booking profits, exiting their investments at 2-3x.

For instance, Sequoia invested in and exited from Nasdaq-listed Cognizant and Hyderabad-based Nagarjuna Constructions in this period, realising more than 2x on both deals. Private equity arm of JM Financial invested in LIC Housing Finance and exited at 2.5x.

SAIF, which has over $2-billlion under management across three funds, would be the second private equity fund to make a profitable exit from MindTree this month. A private equity fund managed by Capital International, the global asset management major, sold over 10% in the Bangalore-based company since late August.

"Top class companies run by world class management were trading cheap, so we bought them," said Vishal Sood, principal with SAIF Partners, explaining the investment straegy.

"We are a PE fund so public market is never going to be our primary strategy. But those valuations were too hard to resist. Even then it was a small part of our portfolio" added Sood. Besides open market investments, SAIF also recently invested in Network 18 Media & Investment Ltd, the holding firm of the Raghav Bahl promoted Network18 group, through fresh issue of equity.