Lehman Brothers has exited its almost six-year-old investment in IT firm KPIT Infosystems with 2.2x returns. Lehman had investments in the company that has the backing of Cummins Inc through two separate entities with one of them generating over 2.6x gross return.
The investment bank had originally invested around Rs 35 crore to pick 8% stake in KPIT Info in January 2005 through a preferential allotment. It also bought more shares (for an estimated Rs 7-8 crore) through a separate arm Lehman Brothers Asia Ltd a/c GRA Finance Corporation Ltd supposedly immediately after the stock market crashed after hitting a peak in January’08, taking its total holding to around 8.4%.
Both the entities had sold a large chunk of shares last December, encashing around Rs 36 crore. Lehman held around and sold the remaining 4.4% stake in the company on Thursday, netting Rs 59 crore.
Bulk of the shares were purchased by Norges Bank- Government Pension Fund Global besides DSP Blackrock Equity Fund and Black Rock India Equities Fund Mauritius Ltd.
Lehman that had filed for bankruptcy in September 2008, precipitating a severe blow to an already tentatively poised global capital markets, had also been gradually liquidating its investments in Indian firms.
Early this year, it had entered into an agreement with KSK Group giving the Indian group the right of first refusal to buy back part of the stake owned by Lehman Bros in KSK Energy Ventures. KSK Group owns around 52% in the Indian listed power firm and got the option to raise its holding by purchasing around 3% from LB Mauritius III Ltd for $52.7 million (Rs 247.5 crore).
Another unnamed third party was also granted the right to buy a separate chunk of shares owned by a different Lehman Bros affiliate cumulating to 2.83% stake for $40.5 million (Rs 190 crore).
Lehman had invested Rs 339 crore in the power firm in January’08 to pick over 30% stake, months before it filed for bankruptcy. Lehman Bros held 18.9% shares in KSK Energy Ventures before the agreement of which 12.23% stake is locked up until October 2011 through a share lock up agreement. KSK Group already has the right of first refusal on this locked-up stake of Lehman Bros and it along with the other investor now has the right to buy out the balance 6.5% stake by June 2011.