The limited partners of ChrysCapital should be a happy lot. The New Delhi-headquartered private equity firm has completed its exit from Shriram Transport Finance Company (STFC), a Chennai-based commercial vehicle financier, netting a multiple of around 11-12x.
The PE firm sold its remaining 2.13% stake in STFC for Rs 174.3 crore by Wednesday, market data reveals.
According to VCCircle calculations, ChrysCap has earned more than Rs 1,400 crore on the investment it made five years ago. The investment was made from ChrysCap’s $258-million third fund through its subsidiary UNO Investments.
ChrysCap made a total investment of around Rs 100-120 crore in the firm, picking up shares in STFC for Rs 35 each. This would mean an exit multiple of around 11-12x. While ChrysCap sold a partial stake last year, most of the stake, worth Rs 1,250 crore, has been sold in the markets since February 2009. The stock market rally only helped the PE player.
Back in early 2005, Ashish Dhawan-led ChrysCap picked up stakes in three of Shriram Group’s truck financing companies - Shriram Transport Finance Co Ltd (STFC), Shriram Investments Ltd (SIL) and Shriram Overseas Finance Ltd (SOFL). The latter two were merged with the former in same year and ChrysCap ended up with 35 million shares or 17.26% stake.
From a sentiment perspective, this exit should send out a strong revival message to deal-making community.
This deal would also mark a milestone for ChrysCap, which manages more than $2.25 billion across five funds, as its biggest exit yet. The STFC deal displaces the exit from Suzlon Energy, in which the 10-year-old PE player invested Rs 100 crore and made a reported Rs 1,300 crore, in terms of magnitude. A mail sent to ChrysCapital's spokesperson for a comment did not elicit any response at the time of posting the story.
STFC is part of Chennai-based Shriram Group, which has interests in consumer finance, infrastructure, real estate. etc. It reported a 57.10% jump in profit after tax in FY'09 at Rs 612.40 crore, with revenues up by more than 49% to Rs 3,692.43 crore. ChrysCapital had also invested in Shriram EPC, which it exited, and it currently holds a 13% stake Shriram City Union Finance.
ChrysCapital has pulled out a total of Rs 1,450 crore ($308 million) from the markets since February this year, which also includes a Rs 200-crore exit from Redington India Ltd, a supply chain solution providers in the IT and telecom space. At a time when endowments and pension funds - which constitute ChrysCap's LP base - still haven't recovered from the denominator effect, this would be a welcome relief.
Denominator effect means inability or reluctance of institutions to allocate fund to PE asset class due rise in its proportion in its overall portfolio. This was due to marked-to-market (MTM) nature of other assets like stocks and bonds in their portfolio, unlike PE class.
ChrysCapital's current portfolio includes Axis Bank, ING Vysya Bank, Moser Baer, Mahindra Financial Services, Amtek Auto, among others. Some of its exits include IVRCL, Yes Bank, Suzlon, MphasiS and Wipro Spectramind.