The bidding process for acquiring Axis Private Equity Ltd is getting hotter.
Mumbai-based Edelweiss Capital, a leading diversified financial services company and Elephant Capital are believed to be in the fray to acquire the private equity firm. Both the firms have submitted their bids with Axis Bank, the parent firm, this week, sources closes to the development told VCCircle.
E-mails sent to Gaurav Burman of Elephant Capital and Rashesh Shah of Edelweiss did not elicit a response at the time of posting this article.
The Economic Times reported today that six bids had been filed and identified four bidders as IL&FS Investment Managers, Aditya Birla Private Equity, Shapoorji Pallonji group and US-based Darby Private Equity.
Axis PE, which is in the process of spinning off from parent firm Axis Bank, has raised about $150 million for its Axis India Fund so far. The plan of spinning off as a separate entity was termed as a strategy to win the confidence of offshore limited partners, who were earlier concerned about the possible conflict of interest between the bank and the PE arm.
When contacted, Alok Gupta, MD& CEO, Axis PE, declined to comment on the development. In response to a mail sent to Shikha Sharma, MD & CEO, Axis Bank, a spokesperson said, the bank is unable to provide any details in this matter. The valuation details are not known yet.
According to an analyst, the possibility of a management buyout cannot be ruled out. “In the Western world, spinning off the arm as a separate PE entity and being acquired by the management is not rare while in India this trend is yet to happen.”
Instead of selling to the highest bidder, the Axis Bank management is likely to choose the player who fits well with the Axis’ portfolio, an industry source said. “The bank has decided to spin off the PE arm to bring confidence among the LPs. So they will be cautious to sell the firm to the right acquirer,” he said.
Pankaj Dhandharia, National Director, Industrial & Consumer Products at Ernst & Young, said, "There is much interest in the deal as the successful bidder will get a better platform in the PE space through acquiring this reputed firm. It is the first time in India that a PE arm is kept on the block."
Elephant Capital plc, formerly Promethean India plc listed on AIM in April 2007. During the time of listing, it was part of Promethean Investments, a UK-based private equity business which was co-founded by Gaurav Burman. In August of 2008, the Indian business was separated from the wider group to pursue an independent strategy, and Promethean India was re-branded as Elephant Capital, led by Gaurav Burman. Out of the fund of £57.5 million, £7.5 million was contributed by the Burman Family. So far 60% of the fund has been deployed. Its investments in India include NIIT, Mahindra Forgings ($3.31 mn), Obopay, Nitco Ltd ($2.26 mn), EIH ($9.77 mn) besides recent portfolio firm Global Cricket Ventures ($10 mn). It has acquired a minority stake in Amar Chitra Katha Pvt Ltd recently.
Edelweiss Capital has been planning to set up its own PE fund, following its split-up with Blue River Capital, a $100 million fund it had set up in partnership with Shujaat Khan, former MD, Chryscapital. Last year, Edelweiss made first closure of its Edelweiss Special Opportunities Fund LLC (ESOF), at $105 million. The fund, sponsored by Edelweiss Capital’s overseas alternative asset advisory arm EAAA LLC, is to invest in transactions presenting special investment opportunities in India. Edelweiss has a net worth of over Rs 2400 crore and a pre-tax profit of Rs 329 crore for FY09.