Lehman Brothers has sold bulk of its 1.8% stake in financial services firm Edelweiss Capital with an estimated haircut of around 5% on its three-year-old investment. Lehman had picked a direct stake of around 2% in June 2007 at a price of Rs 560 a piece (which translates into Rs 56 per share after accounting for share split and bonus shares allotted two months ago).
On Friday, Lehman Brothers Netherlands Horizons B V sold 9.9 million shares out of 13.5 million shares held by it at a price of Rs 53.33 encashing around Rs 53 crore. Its remaining 3.6 million shares are valued at Rs 22 crore. Edelweiss share price has shot up around 6% in mid-day trade on Monday.
This is in sharp contrast to the time when a prominent foreign investor quitting used to drum down share prices of Indian companies. Although it reflects the irrelevance of Lehman Bros today, it also shows investor confidence in the company that is backed by several other institutional investors including some private equity firms.
Late last year, US-based hedge fund Galleon had sold its entire 7% holding in Edelweiss Capital with 146% returns in three years. Yet another pre-IPO investor Dubai-listed Shuaa Capital had sold a bulk of its with a return of around 70%.
Other pre IPO shareholders of Edelweiss that acquired another brokerage firm Anagram early this year, include Greater Pacific Capital, GIC Ventures, Americorp, BIH and Sequoia.
Lehman also invested around Rs 180 crore through fully convertible debentures that becomes convertible into redeemable preference shares in three equal installments every year starting January’2012.
Lehman Bros had also separately invested Rs 68 crore to buy 26% stake in ECL Finance that is engaged in financing, money lending, bill discounting, factoring, corporate lending with or without securities; providing finance to industrial enterprises and participating in consortium finance with other institutions or body corporates.
The US-based I-bank that filed for bankruptcy in September 2008 has been liquidating its investments gradually and had recently struck a deal to sell back part of its holding in KSK Energy Ventures to its promoter KSK Power Ventur plc.