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Matrix Cellular promoter puts majority stake sale on hold 

CX Partners invested Rs 166 crore to pick around 38 per cent stake in the company two years ago.

The promoters of CX Partners-backed Matrix Cellular International Services Pvt Ltd, which provides telecommunication solutions for Indians travelling abroad, have put on hold their proposed plan to sell a majority stake in the venture, sources privy to the development told VCCircle.

CX Partners was also expected to part exit from the venture in the deal, where the sellers were looking to sell a little over half of the company for around $100 million. This could have given over 2x returns in part exit for CX Partners in its less than two-year old investment.

The sell-out plan was put on the backburner as the promoters did not find a suitable buyer who could match their expected valuation, sources said.

VCCircle had first reported last November that the promoters are looking to sell a majority stake. Investment bank Avendus was involved in the negotiations.

The firm is promoted by the Dugal family. Gagan Dugal is its managing director.

An email query sent to Dugal did not elicit any response but Vivek Chhachhi, a partner at Matrix Cellular’s private equity investor CX Partners confirmed that the strategic sale plan is off but declined to share any further details.

“We have around 38 per cent in the company and we will look at a partial exit sometime either through an IPO or to a financial investor,” Chhachhi told VCCircle.

According to Chhachhi, CX Partners could look at an exit in a year, but added that since it is a difficult market it’s tough to put an objective timeline.

It is learnt that CX Partners had invested around Rs 166 crore in the company in early 2011, through a mix of primary share subscription and secondary purchase of stake. Around two thirds of this went to the Dugal family and another Rs 50 crore went to ad-for-equity media investor Bennett Coleman & Co Ltd (BCCL). Matrix Cellular received around Rs 15 crore through fresh issue of shares in the deal which valued it around Rs 440 crore or around $100 million back then.

BCCL had committed around Rs 50 crore in the communication services firm in early 2008 and had previously part exited by selling convertible debentures to the promoters. The media firm, which sells ad space on its media vehicles in lieu of equity stake, had generated around 50 per cent return on its three old investment in Matrix Cellular, sources said.

Started in 1995, Matrix Cellular offers International SIM and data solutions by which travellers save up on high international roaming charges on home carriers. It is facing competition from companies like Uniconnect and Clay which offer the same services and also telecom companies like Bharti, Vodafone and Reliance Communications which have started providing a number of country specific solutions that enable international travellers to cut down on high roaming costs.

(Edited by Joby Puthuparampil Johnson)

Matrix Cellular International Services Ltd. (Formerly known as Matrix Cellular International Services Pvt. Ltd.) is engaged in providing telecommunication solutions and services for Indian travelers going abroad. It offers international subscriber identity module (SIM) cards, 3G data cards, matrix forex card, internet packs, travel insurance and wireless communication tool services for both India and abroad. The company also provides corporate packages such as Matrix 1 SIM that allows an Indian traveler to roam various countries with a single mobile connection; and business to business mobile communication services designed for mobile rental companies, event organizers, and telecom vendors. It serves automotive, banking, consulting, consumer durables, construction and engineering, energy, fast-moving consumer goods (FMCG), information technology and information technology-enabled service (ITES), media and entertainment, pharmaceutical and textile companies, as well as embassies and government agencies. The company was founded in 1995 and is based in New Delhi, India.

(CX Partners, CX Partners Pte. Ltd.)

CX Capital Management Ltd. is a private equity firm with $500 million assets under management. It provides growth capital to companies operating in India. The firm also makes distressed, turnaround, and mezzanine investments. The firm seeks to invest in power, electronics, hotels, telecommunications, consumer products and services, information technology and financial services. The company was founded in 2009 and is based in New Delhi, India.