ICICI Venture has exited its five-year old investment in textile firm Sangam India through open market sale of its entire 15.75% stake on Tuesday. The private equity firm is estimated to have generated return of 36% on the last chunk of this investment (not counting dividend earnings) which is modest for such a long investment in a period when the stock market has seen significant movement.

However, given that the textile sector in particular had been battered the investment firm could be considered lucky not to come out with a bruised red flag.

ICICI Venture had originally picked over 21% in Sangam India through a preferential allotment in August 2005 along with warrants. The PE firm raised its holding by converting all the warrants in two tranches in 2006 giving it a cumulative stake of over 23%. These shares were purchased at a price of Rs 36.7 a piece. It is estimated to put in a total of Rs 33.4 crore.

The PE firm part exited through multiple secondary stock market sales in March 2007 and thereafter in July-September quarter in the same year. In particular the first set of part exit was at double the price at which it invested but thereafter the share price was on a downhill journey. The share price had lost as much as three fourth of its value at which ICICI Venture bought in early 2009 when the Indian stock markets bottomed out.

The PE firm is estimated to have pocketed around Rs 53 crore in total which gives it a simple return of 58% over a five year period.


This comes straight after a ICICI Venture controlled company is bringing in a new strategic investor that will dilute the PE firm’s holding by about half. Bharati Shipyard is acquiring 51% stake in loss-making Chennai-based Tebma Shipyards through fresh issue that will bring down ICICI Venture stake to around 26% from 53% at present.

However, this has been a underperformer. ICICI Venture had acquired 33% stake in Tebma in February 2007 and subsequently bought 20% more in an open offer and is estimated to have put in a total of Rs 100 crore for this investment. Post equity dilution with entry of Bharati Shipyard its 26% odd stake will be valued at around Rs 40 crore.

Another ICICI Venture-backed firm RFCL Ltd (formerly Ranbaxy Fine Chemicals Ltd) is in the process of being acquired by Avantor Performance Materials Holdings (earlier known as Mallinckrodt Baker) that will mean an exit for the PE firm. Although the deal value stands undisclosed it is expected to generate good profit on this transaction compared to its cost of acquisition pegged at Rs 100-125 crore way back in 2005.

The PE firm is also said to be exploring exit options from Hyderabad-based biotechnology firm Bharat Biotech which is into vaccines, biopharma and contract research. ICICI Venture holds around 11% stake in Bharat Biotech which is also backed by IFC.

ICICI Venture is also believed to be looking for ways to exit I-Ven Medicare India Pvt Ltd, a special funding vehicle aimed at investing in hospitals and was in talks with India Value Fund Advisors (IVFA) Pvt. Ltd for the same.

The PE firm was also provided an exit in its investment in Metropolis Healthcare when Warburg Pincus invested $85 million early this year to pick a large stake. In another deal, Peepul Capital partnered with Europe’s largest loyalty programme player Payback Gmbh to buy a majority stake in India's largest loyalty card provider i-mint. The deal gave ICICI Venture, a founding investor in i-mint and exit opportunity, even as the PE firm continues to be a minority shareholder in i-Mint.

Almost all of these exits have been from the PE firms two separate funds-- India Advantage Fund- Series 1 and 2.

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