Citigroup Venture Capital International (CVCI), that has been on a sell-off mode from its multiple portfolios in India, has pressed another part exit button from Mumbai-based polyester chips firm JBF Industries. CVCI sold 3.5% out of its remaining 4.97% holding in JBF to net Rs 44.7 crore ($10 million).
This comes soon after JBF acquired 100% control over its Singapore arm JBF Global Pte Ltd (which, in turn, is a holding Company of JBF RAK LLC, UAE) by acquiring all of CVCI’s equity in the Singapore firm for $104.41 million.
Earlier, the private equity arm of Citigroup, which held a 20.92% stake as of March 2010, had last July offloaded 14.3% stake in JBF Industries for Rs 120 crore through open market sales.
Originally, CVCI had invested around Rs 60.5 crore in JBF Industries in June 2005 at Rs 46.5 per share through preferential allotment and warrants. It later increased its bet on the company by investing in the Singapore-based subsidiary of JBF.
It sold a large chunk of shares last July at Rs 135.1 per share and sold the latest block of shares at Rs 175 per share(or 3.7x its cost of purchase). This means it has made a little over 3x on its over five-year-old investment till date.
Another investor that had put in money along with CVCI in JBF, IL&FS Private Equity has exited the firm before CVCI. JBF Industries had recently said it is raising Rs 125 crore ($27 million) through issue of cumulative redeemable preference shares to state-controlled lender Bank of India. Although the firm has not disclosed for what purpose it has raised the fund for, it could be to reduce debt as the company has seen its interest payments balloon over the recent past.
Meanwhile, for CVCI, this could be part of its bigger exit strategy. Last November, it had sold 7% of its 10.4% holding in Jindal Drilling with an estimated 11% haircut, having picked the stake at the peak of the bull run in the stock market in January 2008. Part of DP Jindal Group, Jindal Drilling & Industries Ltd is engaged in offshore drilling and allied services.
CVCI had also sold a large chunk of its stake in six-year-old investment in drug and chemical maker Jubilant Organosys and also real estate firm Emaar MGF in the recent past. CVCI had invested Rs 228 crore in November 2006 in Emaar MGF that was bought over by Emaar in August last year for around Rs 277 crore, ahead of its pending public float. It had also sold shares of KS Oils.
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