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Kotak PE Eyes Exits In 5 Portfolio Firms

29 April, 2010

Kotak Private Equity Group, the PE arm of Kotak Mahindra Bank, has lined up an exit plan, largely through strategic stake sales, for five of its portfolio companies this year.

VCCircle has learnt that Kotak is ready to sell its stake in BVG India Limited, Metahelix Life Sciences Private Limited, Home Solutions Retail (India) Limited, Bharat Fritz Werner Limited (BFW) and SIRO Clinpharm. These portfolio firms come from diverse sectors including machine tools manufacturing, retail, biotech, facilities management and pharma. Kotak has a portfolio of about 20 investments.

Earlier, VCCircle had reported Kotak PE was in talks with two global clinical research organisations (CROs) to sell part of the 70% stake, which it holds along with 3i, in Mumbai-based SIRO Clinpharm Private Limited (SIRO).

Kotak Private Equity Group head Nitin Deshmukh could not be reached for comments. It is learnt that Kotak is eyeing returns in the region of 2x (or twice its investment) in these portfolio exits.

Apart from its life sciences fund, Kotak India Venture Fund 1 of $68 million, KIAL has raised two other funds of $160 million (India Growth Fund 1) and $415 million (Kotak India Growth Fund), with its cumulative fund under management to the tune of $1.4 billion.

Earlier, quoting Nitin Deshmukh, Reuters had reported that the firm, which manages $750 million in funds and boasts a portfolio of 20 companies, is looking to take two companies public in the fiscal year beginning April 2010. “We are gearing up for strategic exits, as well as some IPOs,” he said in an interview with Reuters last year.  “The exit environment has come back. Companies will look to capitalise on the FY11 projections,” Deshmukh had said.

It was in 2005 that Kotak invested about Rs 25 crore in Bangalore-based Bharat Fritz Werner Limited, which manufactures computer numerical control machines and machine tools with Honda Motorcycles, Maruti Udyog, Toyota Kirloskar and L&T as clients.

Its other portfolio firm Home Solutions Retail (India) Limited is a subsidiary of Pantaloon Retail India Limited (PRIL). In 2006, Home Solutions raised Rs 120 crore ($26.6 million) from ICICI Venture and Kotak SEAF India Fund. ICICI Venture has a 15% stake while Kotak SEAF has a 6% stake. Pantaloon was considering merger of its subsidiary Home Solution Retail with itself.

Kotak holds a majority stake in Metahelix Life Sciences Private Limited, an emerging agri-biotech company focusing on developing technologies for crop improvement. In 2008, Kotak invested Rs 40 crore in BVG India, a facilities management service provider.


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3 Comments
manish jain . 6 years ago

it will be close to impossible to get 2x on this portfolio. kotak will be lucky to get 1x also. the early stage investments are still losing cash and the cash generating ones are still too small for an exit. in most cases kotak will be at the mercy of the promoters to get an exit which is a very tough position.

add to this the lemon like INX MEDIA where kotak lost a boatload of money and another one like paramount airways that has gone bust and you have a situation where LP’s will be fortunate to get 0.5x of their investment back after paying management fee (!) and other expenses.

Definitely a fund in the bottom decile of the PE industry.

Rupesh Kumar . 6 years ago

Lucky if they get a return of 2X in the above five investments. As all of these companies are still in need of capital and are not earning enough cash to sustain their growth.

Uday . 6 years ago

I don’t agree with these comments. Kotak PE has always taken a long term view on good entrepreneurs.

Kotak PE Eyes Exits In 5 Portfolio Firms

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