Private equity firm Milestone Capital has filed a draft red herring prospectus (DRHP) for an initial public offering which would constitute a 30% stake dilution. The PE firm plans to use the proceeds from the issue to seed an infrastructure fund and a small & medium enterprises (SME) focused fund. The funds will also be used to purchase an office in Mumbai.
Milestone Capital is planning to raise Rs 800 crore infrastructure fund with a green shoe option of another Rs 200 crore. It is also planning a Rs 350-crore SME fund with a greenshoe of another Rs 150 crore. Of the issue proceeds, Rs 100 crore will be used to seed an infrastructure fund and another Rs 50 crore SME fund. Around Rs 25 crore will be used to purchase and furnish an office in Kurla (West), Mumbai.
Milestone Capital has launched two new funds this year in partnership in areas like shipping and special situations. The Rs 400-crore Special Opportunities Fund – I will be managed by Capstone Capital, a JV between Milestone and Money Matters Financial Services. The five-year tenured fund was launched in February. Another fund is $100-million Blue Ocean Maritime Fund, which will acquire and operate maritime vessels, and is in talks to enter into a JV with Mercator.
Milestone Capital currently has two domestic and one overseas realty schemes. The two domestic schemes, MDS-I and MDS-II, have committed corpus of Rs 229 crore and Rs 503 crore, respectively. Milestone Fund LLC, the offshore fund, has a committed corpus of $82 million (Rs 380 crore).
Besides it also has a joint venture for real estate with IL&FS Investment Managers, the only listed private equity player in India. Milestone holds a 40% stake in the JV, IL&FS Milestone Realty Advisors Ltd, which has around Rs 1,000 crore in corpus across two funds.
Milestone Capital also has JV with Religare Venture Capital (part of Religare Enterprises) for an education and healthcare focused fund. This fund has managed to raise Rs 355 crore from domestic investors and is also planning to raise another $250 million from overseas investors.
Milestone Capital reported an income of Rs 22 crore in FY10, up from Rs 19.94 crore in FY09. The PAT grew from Rs 3 crore to Rs 4 crore in this period. The PE firm has assets under management of Rs 3,152 crore, according to the DRHP.
IL&FS PE, the only listed peer of Milestone, has a market capitalisation of Rs 905 crore and trades at a price-to-earnings (P/E) ratio of 22-23. The firm, which has $2.8 billion under management, reported income of Rs 176 crore and a net profit of Rs 74 crore for FY10.
(Disclaimer: Our sister division VCCEdge has assisted Milestone Capital in research regarding its DRHP)