International Finance Corporation (IFC) is picking 4.4 per cent in Vinati Organics by converting its foreign currency convertible bonds (FCCBs) into shares of the listed manufacturer of pharmaceutical input and specialty chemicals.
IFC had invested $5 million (Rs 22 crore) through subscription of FCCBs in 2011.
Vinati Organics' board is meeting later this week to approve the conversion of the bonds through allotment of 2.21 million equity shares at the conversion price of Rs 100 each.
Vinati shares are trading at Rs 425 each, which would mean IFC is sitting on over 4x in unrealised gains in its three-year-old investment.
FCCBs give the right but not an obligation to the investor to convert it into shares.
Vinati also counted another PE firm WestBridge Capital as a shareholder till recently. IT sold its entire stake in its two-year-old bet on Vinati Organics, generating a high internal rate of return (IRR).
It sold its entire 2.1 per cent via open market transaction and raised Rs 39.25 crore in the process. Domestic mutual funds bought the shares of the specialty chemical company.
WestBridge had invested around Rs 14-15 crore in tranches in the company starting two years ago.
Vinati Organics posted a net profit of Rs 24.11 crore for the quarter ended June 30, 2014 compared with Rs 12.65 crore for the same quarter last year. The firm posted net sales of Rs 198.3 crore last quarter compared with Rs 152.4 crore in Q1 FY14.
(Edited by Joby Puthuparampil Johnson)