ChrysCap has raised its stake in infrastructure firm Gammon India to 9% by investing around Rs 60 crore(~$13 million) through open market purchase. The private equity firm had invested in the company through bottom fishing in the second half of 2008 when stock market valuations were close to their recent lows.
It had picked as much as 9.8% stake as of December 2008 in multiple tranches starting with purchase of around 4.5% from JP Morgan at a price of Rs 220 per share in July’08. It hiked stake soon after by buying 1 million shares from HDFC Mutual Fund in September’08 and ramped it up further in the following quarter when the stock price crumbled by almost two-thirds within two months after Lehman Brothers declared bankruptcy.
ChrysCap’s holding got diluted after Gammon India issued shares against other securities as also a qualified institutional placement last year in December. As of June end its holding stood at 6.67% that has gone up approximately to 9% after the latest purchase.
The private equity firm is estimated to have put in around Rs 196 crore ($42 million) in total in Gammon India till date. ChrysCap, one of the biggest and most active PE investors in the country during the bull run of the stock market, had been prominent player in the PIPE market averaging out its cost of purchases when markets tanked.
It had averaged its initial cost of purchase that was at a high price and lost almost three fourths of its value when stock tumbled in late 2008. The latest purchase is at a price(Rs 195 per share) which is close to the original cost of investment indicating that the firm is quite bullish on the company. Infrastructure is one of the big themes of the India investment story that has emerged over the last two years.