ICICI Venture has joined the likes of ChrysCap, Nalanda Capital and Warburg Pincus in buying shares of listed companies from the secondary market. The private equity firm through its India Advantage Fund-VI bought 2.78% in multiplex operator PVR Ltd on October 29.
Given the weighted average price of the scrip on the day, ICICI Venture would have bought the stake at around Rs 5.5 crore ($1.1 million). The PE firm already held 6% stake in PVR and with the new investment now holds 8.78% in the company. In the recent deal, ICICI Venture bought 6.4 lakh odd shares for around Rs 95 per share. The fund bought 13.8 lakh shares in June at a price of around Rs 165 per share.
This is the second time ICICI Venture has bought into PVR. The private equity firm had originally invested Rs 38 crore in 2003 and followed it up with an investment of about Rs 9.3 crore in preference capital in 2005.
The PE firm made multiple partial exits from PVR starting with a pre IPO deal with foreign institutional investor T Rowe Price in a deal worth Rs 23 crore. Post IPO ICICI Venture held around 22.37% equity of PVR and thereafter gradually sold shares in the open market. In November 2007 ICICI Venture had fully exited PVR selling out its remaining stake. That transaction gave ICICI Venture an estimated 4x return of Rs 195 crore on total investments of Rs 47 odd crore.
ICICI Venture once again took an exposure to PVR in June this year buying 6% for an estimated Rs 23 crore, this time from the open market. However, this time the PE firm has not been so lucky. The stock is down more than 40% since then. With the new transaction, ICICI Venture has now investments of around Rs 29 crore for 8.78% stake which is valued at Rs 20 crore odd.
Besides PVR Ltd, ICICI Venture has also invested Rs 60 crore in PVR Pictures Ltd, the firms film production and distribution arm in June this year.
The investment of ICICI Venture is somewhat similar to ChrysCapital's recent investment in Gammon India Ltd through open market deals. ChrysCap had also successfully exited Gammon India in 2006, making 4.75x returns. The PE fund has invested again, buying a 4.5% stake in construction firm for around Rs 86 crore.
While private investment in public enterprise (PIPE) deals by private equity firms is not unheard of, lately a number of them have been picking shares to bring down the cost of investments.