India Value Fund Advisors (IVFA) has struck its second buyout deal in as many months by signing an agreement to buy National Bulk Handling Corporation Limited (NBHC), a subsidiary of Financial Technologies (India) Limited (FTIL) for Rs 241.74 crore ($39.4 million), as per a company disclosure.
The transaction, subject to certain customary closing conditions including the approval of shareholders of FTIL, is likely to be completed in the second half of next month.
NBHC offers various commodity management solutions including storage and bulk handling services, pest management, testing and certification, market intelligence, trade consultancy & support, warehouse audit & accreditation & commodity valuation and collateral management services. It has a pan-India presence managing 569 storage facilities (warehouses and cold storages) under the lease and franchisee basis, covering an expanse of over 1.47 million MT capacity and admeasuring 8.8 million sq. ft.
The firm’s revenues grew 27 per cent to Rs 156.28 crore and net profit rose four-fold to Rs 14.5 crore for the year ended March 31, 2013.
The deal values NBHC at 6x EBITDA based on one year old earnings.
It was put on the block as part of a wider asset sale and restructuring programme by Blackstone-backed FTIL.
FTIL had last month appointed a committee to see through a restructuring process which includes sale of 24 per cent stake in MCX as also divestment of other assets besides roping in a strategic investor in the company. Following this, JM Financial was roped in as a financial advisor for stake divestments.
The development follows an order by Forwards Market Commission (FMC) in December that declared FTIL and its promoter Jignesh Shah unfit to operate an exchange in the country, in light of the National Spot Exchange Ltd (NSEL) scam. FMC also directed FTIL—which owns 26 per cent stake in MCX— and Shah to bring down their stake in the exchange to 2 per cent.
Meanwhile, for private equity firm IVFA this would be second such buyout transaction in the last two months. The PE firm had been active in the mid-market buyout deal segment during 2005-11. However it had been mostly picking minority stakes in its investments since then. Early this year, it backed former a Godrej group executive A Mahendran to buy out pest control services firm ISS Hicare (formerly Godrej Hicare).