Baring Private Equity Partners India Ltd sold more than half its stake in gold loan financier Manappuram Finance Ltd on Tuesday, clocking benchmark returns on the investment it had made nearly a decade ago.
The private equity firm offloaded about 4.1 million shares, or a 4.9% stake, in the non-banking financial company via bulk deals. It sold the shares at Rs 174 apiece, totalling about Rs 721 crore ($101.2 million).
The PE firm recorded a return of 6.4 times on its investment in absolute terms and clocked an internal rate of return, or annualised return, of 29%, it said in a statement. That’s near the higher end of the 20-30% IRR that private equity and venture capital firms typically chase in rupee terms in India.
Baring PE India continues to own a 3.12% stake in Manappuram. This is worth about Rs 450 crore based on the closing price of Manappuram’s shares, which fell 6.3% to end at Rs 172.55 apiece in a buoyant Mumbai market.
The buyout firm had invested in the NBFC between 2011 and 2013, as it sought to benefit from the increasing reach of financial services in India and help the company in expanding its product offering from gold loans to microfinance, housing finance and vehicle loans.
The PE firm also said that it has delivered life-to-date return of over 28% gross IRR across more than 50 investments and that it has outperformed public equity benchmarks by 1,600 basis points over the last two decades.
The firm has $1.1 billion of clients’ assets under management. It invests across the information technology, healthcare, financial services, consumer goods and real estate sectors.
The firm has in the past picked up minority stakes in companies such as non-bank lender Muthoot Finance Ltd, consumer goods makers Marico Ltd and Dabur India Ltd, and drugmaker Indoco Remedies Ltd. It has also acquired majority stakes in BFL Software and JRG Securities Ltd, which is now known as Inditrade Capital Ltd.
In 2017, the PE firm kicked off a process to raise its fourth fund, nearly a decade after its last offering.
The Rahul Bhasin-led entity was spun out of Dutch financial services firm ING as part of a management buyout of different units globally and operates separately from Baring Private Equity Asia. It had raised $563 million in its third fund in 2008, $177 million in its second fund three years earlier and $40 million in its first fund in 1998.