Bennett Coleman & Co Ltd (BCCL) has made a partial exit from jewellery maker Rajesh Exports. This is one of the early exits that the media firm has made from its private treaty firms. The media giant had been picking equity shares in small and mid size companies in lieu of advertisement space in its publications and electronic media for the last 4-5 years. It had last year exited its investment in Deccan Aviation (now Kingfisher Airlines) when UB Group acquired stake in the airlines.

Now BCCL has sold 2.3% stake out of 4.66% holding (as of September 31, 2008) of Rajesh Exports at a price of Rs 20.51 per share through the bulk deal route. The shares were acquired by a high networth investor.

The jewellery firm made a preferential allotment to BCCL in November'05 at a price of Rs 154 per share with a three year lock-in. In the meantime the stock price had moved up sharply and touched a high of Rs 1,020 in December 2007.

Last year Rajesh Exports was being wooed by some investors and according to newsreports was in talks with global diamond major De Beers and private equity firm Blackstone who wanted to buy out the company. However, the promoters were looking at a much higher price which didn't lead to any transaction.

The stock market collapse coupled with slowdown in global economy (a large part of Rajesh Exports' revenues come from selling diamond jewellery abroad) the stock price plummeted. Adjusting for stock split and bonus, BCCL sold the shares at a price of Rs 123 per share as against the acquisition price of Rs 154/share. This means BCCL took a 20% haircut in its investment in Rajesh Exports.

The theee year lock-in clause disallowed the firm to sell shares when the stock reached a peak last December. If BCCL had sold the shares at that time it would have made almost 7x returns on its investments in two years flat.

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