When the markets are down, it is not just company promoters buying back shares, but the funds are also buying back their own shares to deliver value to its key stakeholders.
After buying back shares worth $30 million in last quarter, the directors of London's Alternate Investment Market (AIM) listed Kubera Cross-Border Fund Limited have authorised the firm to buy back shares worth $5 million more. In December 2008, the firm had bought back shares worth $30 million, which accounted for 25% of the then outstanding shares, the fund said in its latest filing to the London Stock Exchange-owned AIM. The shares of Kubera is trading at a significant discount to the reported Net Asset Value since October, 2008. The buy back was accretive to NAV to the extent of $ 0.15 per remaining share.
Kubera Cross-Border has also said in its filing that it will cease to make any new investments, other than follow-on investments in the existing portfolio, until the independent directors determine otherwise. This, however, may not mean much in terms of the firm's ability to make deals, Abhishek Maheshwari, Principal at Kubera Partners LLC, the managers of the fund, told VCCircle.
He added that they will continue to look at new deals and are in discussion with bankers. "The new investments will be made with board approval," Maheshwari said, adding "Investors also realise that this is a good time to make investments." The fund still has around $50 million of capital after spending $30 million on share buyback and an investment of $120 million in companies. Kubera Cross-Border has till now done seven deals.
This development comes at a time when a number of AIM listed funds which are focusing on India investments have come under scrutiny. KSK Emerging India Energy Fund (KEF), a £100 million fund listed in AIM, was wound up after the shareholders passed a resolution demanding the same.
These steps have been taken by Kubera Cross-Border as its share price is not in alignment with its net asset value (NAV). Maheshwari admitted that their fund was also under pressure from hedge fund investors in the last quarter becasue of the NAV-share price mismatch. In fact, the share buy back was a result of the investors' pressure on the management. The fund has appointed another broker in addition to LCF Rothschild in order to expand its shareholder base.
Roping In Third Party Investors In Portfolio Companies
Kubera is also evaluating steps like third-party financings of investee companies to provide external validation of its portfolio companies. Kubera focuses on cross-border opportunities. Its posrtfolio companies include Kejriwal Stationary (paper-based stationary manufacturer), Adanya Inc (corporate e-learning), Venture Infotek (transaction process services), Ocimum Biosolutions (genomics outsourcing), among others.
Kubera Cross-Border Fund was listed on AIM in 2006, raising $225 million from investors. Kubera Partners has also made investments alongside the fund amounting to a total of $11.2 million, which aligns the fund managers' interests with that of the fund. Kubera Partners is co-founded by Ramanan Ranghavendran, an ex-senior Partner at TH Lee Putnam Ventures (THLPV) and Kumar Mahadeva, an ex- Chairman and CEO of Cognizant Technology Solutions Corporation.