CX Partners— the private equity firm floated by former head of Citigroup Venture Capital–has bought an 8% stake in steel company Monnet Ispat for Rs 150 crore from the secondary market, its first investment since launch in August 2008.
“We are looking at a close association with Monnet Ispat and will help build the company further,” said Ajay Relan, founder of the firm that manages a $500-million fund, as per this report.
The PE firm bought the stake from a group of foreign institutional investors for nearly Rs 390 a share since February. Monnet Ispat shares rose 1% and is trading at Rs 441 mid-day at the BSE.
Jajodias-run Monnet Ispat has a 0.5-million tonne steel plant at Raipur in Chhattisgarh and the company is establishing another 1.5 million tonne integrated plant and an 80 mw power unit at the same location, which together is estimated to cost Rs 4,000 crore.
This is the second time Relan has been bullish on Monnet. He was on the company’s board from 2004 to 2008 as a part of CVC’s 14% stake in the steel firm. CVC had sold its stake two years ago, around the same time when Relan quit CVC to float his own PE firm. However, unlike last time when he was inducted into the board as a part of fund raised by the company, this time his inclusion in the board could be based on promoters interest in bringing him back.
Earlier as head of CVC India Relan led the team that invested and managed over $1 billion in approximately 40 Indian companies during 2001-2008. CX Partners achieved the first close of $220 million for its maiden fund in March’09. Relan has two other partners in the fund – former CVCI colleague Jayanta Basu and Amit Bhatiani, who was with New York based hedge fund Duma Capital.
The PE firm had managed to raise capital(although pruned in size by around half) at a time when investors had been scaling down exposure to equity chasing PE funds in the aftermath of the Lehman Bros collapse in September’08. Among those who had committed money to the fund include US-based investment firm Morgan Creek Capital.