US-based hedge fund Galleon has sold its entire 7% holding in financial services firm Edelweiss Capital through the open market route on Friday. The fund sold its shares for Rs 256 crore (~$55 million) through two bulk deals on the BSE.
One of the pre IPO investors in Edelweiss, Galleon had originally invested Rs 116 crore (~$25 million) in August 2006 and had been holding on to its 7% odd stake. It had sold about half a million shares early this year between January-March which could have netted around Rs 10 crore (~$2 million that time).
According to VCCircle’s calculations, Galleon, whose founder Raj Rajaratnam is facing charges of insider trading in the West, had picked the shares at an average cost of Rs 197 a piece. It exited the company by selling shares at Rs 485 giving it returns of 146% in three years.
The hedge fund sold a total of 5.27 million shares which were bought by three entities — Privatebank IHAG Zurich, Reliance Mutual Fund and Edelweiss’ Employee Welfare Trust. The Edelweiss scrip rose 0.9% to close at Rs 485.3 on Friday.
Galleon’s exit from Edelweiss is part of asset sales to wind up its funds. Recently, Galleon sold stake in another of its Indian investments Shriram EPC. Galleon’s selloff comes as yet another pre IPO investor cashing out of Edelweiss. Dubai-listed Shuaa Capital also sold over two-thirds of its 2.2% holding for around Rs 59.3 crore to Reliance Capital early this month.
Shuaa had invested $10 million (~Rs 45 crore at that time) and as per VCCircle estimates Shuaa had made the original investment at a price of Rs 275/share in December’06 (through a complex convertible preferential shares route). This gave it a return of around 70% for a large chunk of its shares. Shuaa remaining stake in the financial services firm is valued at Rs 22 crore.
Other pre IPO shareholders of Edelweiss include Greater Pacific Capital, GIC Ventures, Lehman Bros, Americorp, BIH and Sequoia.