Two private equity firms Creador Capital and Multiples Alternate Asset Management are close to investing Rs 100 crore($20 million) each in public-listed non banking finance company (NBFC), Cholamandalam Investment & Finance Company Limited to pick 5 per cent each, according to sources privy to the development. A formal announcement is expected soon.
The investors or the company could not be immediately contacted for a comment. But Cholamandalam Investment & Finance is holding a board meeting today to consider issue of equity shares and/or fully convertible warrants on a preferential basis.
Creador is a private equity firm focused on long-term investments in growth-oriented businesses in India, Indonesia and Malaysia. It was floated a few months ago by Brahmal Vasudevan, former managing director at ChrysCapital. The fund will invest in South-East Asian countries like Indonesia and Malaysia, besides India. For the new private equity firm which is looking to raise $350 million for its maiden fund, Cholamandalam Investment & Finance Company would be its debut deal.
Multiples Alternate Asset Management is an investment advisory firm specializing in making growth investments in mid-sized Indian companies, management led buyouts and spin-offs of divisions from large Indian groups based in India. The private equity firm floated by the former ICICI Venture CEO Renuka Ramnath raised its maiden $450 million sector fund in mid-2011. Cholamandalam Investment & Finance would be its third investment.
Cholamandalam Investment & Finance is majority owned by the Murugappa Group. It is a NBFC with 342 braches across India engaged in the provision of vehicle, home equity and business finance. The company has assets under management (AUM) of over Rs 10,971 crore and half-year net profit of Rs 77.6 crore (as 30th Sep 2011).
At Rs 200 crore investment for combined 10 per cent stake, the deal will value the NBFC at Rs 2,000 crore or 10 per cent higher than its current market cap. Cholamandalam Investment & Finance was trading at Rs 151.8 a share at BSE at 3.30 PM on Tuesday, down 0.78 per cent in a strong Mumbai market on Tuesday. At this price the firm has a market cap of Rs 1,812 crore. With a post money valuation of Rs 2,000 crore, the two PE firms could be buying shares at around the current market price, according to VCCircle estimates.
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