KKR backs Musale family to buy out Navis Capital from Classic Stripes

The Musale family has bought back the stake held by private equity firm Navis Capital Partners in its privately held company Classic Stripes Pvt Ltd, which manufactures automotive graphics, as per a company statement.

The deal value stands undisclosed but a person privy to the development said it is worth Rs 360 crore ($54 million). This could not be verified independently.

This could be another loss-making exit for Navis Capital from India. It had picked 51 per cent stake in Classic Stripes for $100 million (Rs 453 crore then) in 2012, according to VCCEdge, the data research platform of VCCircle.

Navis Capital, which has ceased to make new investments in the country, last year exited Oriental Containers at a loss.

Classic Stripes is the fifth known exit from an Indian portfolio for the PE firm in the last four years. At least four of them—including fast-food chain Nirula's that it exited in 2012—are believed to be at a loss.

In June 2014, Navis Capital also exited Sah Petroleums by selling its controlling stake to Gulf Petroleum Corp at a loss.

Classic Stripes said the promoter family has bought back the shares of Navis Capital with the backing of Kohlberg Kravis Roberts & Co (KKR).

It did not share if KKR has backed the Musale family with a convertible option or has just lent money through its credit unit to enable the transaction.

KKR facilitated a structured deal for the promoters of pathology chain Metropolis Healthcare last year where one of the two co-promoters bought back Warburg Pincus' stake in the firm with the backing of KKR.

In 2013, KKR lent to a promoter owned entity that is the largest shareholder of Apollo Hospitals Enterprise Ltd. KKR holds an option to convert the debt in that private-holding arm into shares of the country's top hospital chain.

"This transaction has enabled Navis Capital to monetise its shareholding in the company and will allow the promoters to take control of the growth strategy of the business," Classic Stripes said in a statement.

Classic Stripes, which is part of Astarc Group, was founded in 1987 by first-generation entrepreneur Kishore Musale. It has business interests in infrastructure, automobile and electronic solutions, angel investing, dairy and agriculture, retail display solutions, automobile and port sectors.

It has more than 60% market share in the Indian decal original equipment manufacturer (OEM) market. Its clients include Hero, Bajaj, Yamaha, Suzuki, John Deere, Continental, Tata Motors and Mahindra & Mahindra.

o3 Capital acted as the sole financial advisor and AZB Partners was the legal advisor to the Musale family.

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