Merlion India Fund, a joint venture between Standard Chartered Private Equity and Temasek, has sold a part of its pre IPO investment in shipping firm ABG Shipyard for Rs 19.3 crore ($4.3 million) with 3.3x (2.3x net) return.

Merlion had coinvested along with IL&FS Private Equity (Leverage India Fund) and Standard Chartered PE in July 2005, months before the public float of ABG Shipyard. The shares were picked through a mix of fresh issue and purchase from the promoters at Rs 113 a piece.

It sold half a million shares of around 4.4 million shares (representing around 8% stake) at Rs 380.22 per share on Wednesday, bulk of which was acquired by the promoters.

Merlion held as much as 18.3% pre IPO which diluted to 15.2% post IPO. It had earlier sold shares in 2007 when share price was hovering around Rs 350-400 per share and had been holding on its stake ever since.

Last year, Leverage India Fund had made a part exit from ABG Shipyard Ltd when it sold 0.5% with an estimated return of around 20%. At the same time Standard Chartered Private Equity had increased its stake in ABG Shipyard from 1.3% in June 2008 to 5.41% by March 2009. It had bought initial part of the stake from open markets in 2006 end for a share price of Rs 217.

ABG Shipyard also raised private equity funds from New York Life Investment Management India Ltd that exited its investment by June 2007.

ABG Shipyard that had lost a corporate takeover battle for Great Offshore to arch rival Bharati Shipyard had apparently also lost out in striking a deal with ICICI Ventures for acquiring another shipbuilder Tebma recently. Bharati Shipyard pipped ABG Shipyard by striking its second deal in less than a year and is acquiring 51% stake in loss-making Chennai-based Tebma Shipyards for Rs 75.75 crore.

ABG Shipyard had been diluting its stake in Great Offshore after it lost out to take a controlling stake.

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