Emerging market private equity major Actis-backed Tema India Pvt Ltd is in talks with private equity investors to raise around Rs 150 crore in a fresh round of funding. Tema, which designs and manufactures heat exchangers. is looking for growth capital by diluting a minority to stake to a fresh investor.
The deal may involve both a primary and secondary component as Actis may look at a possible exit on its five year old investment, said sources familiar with the development.
Actis, which holds around a 35% stake in the firm, had invested Rs 50 crore in April 2005. Actis is said to be keeping its options, including retaining the stake. The PE firm could also look at a partial exit in the deal.
Sources say that the company currently has a run rate of around Rs 250 crore to Rs 300 crore. The PE investors are expected to hold a minority stake after the transaction of up to 49% stake.
The stake sale in the niche player has attracted interest as Tema has already got term sheets from around five private equity investors, said one source. The funds are likely to begin their due diligence in coming weeks. IDFC Capital (formerly IDFC-SSKI) and Centrum are the bankers to the deal.
"At this stage I would not like to make any comments," said H.K. Sippy, managing director of Tema India, when contracted by VCCircle. Actis declined to comment as a matter of policy.
Tema is a manufacturer specializing in designing and fabricating shell and tube heat exchangers for the oil and gas, energy and chemical industries. Heat exchanger are built for efficient heat transfer from one medium to another. The potential scalability and its deep knowledge in the sector make are complementary stories which make Tema
a unique proposition, said one source.
According to VCCEdge, Tema had revenues of Rs 163 crore and an EBITDA of Rs 40 crore in FY09.
The private equity space has been witnessing several secondary deals as investors look for an exit. Some of the large secondary deals include Indivision's exit from Lilliput Kidswear through stake sale to Bain Capital and TPG Growth in a $86-million deal and ICICI Venture's stake sale in Metropolis Healthcare to Warburg Pincus in a $85-million
deal. Another recent deal was Eredene Capital's buyout of Swiss Technology Venture Capital Fund's stake in Ocean Sparkle.