Multiples PE part-exits Cholamandalam Investment & Finance with over 3x

Private equity firm Multiples Alternate Asset Management (Multiples PE) has sold more than half of its stake in Chennai-based non-banking financial company Cholamandalam Investment and Finance Company Ltd for Rs 177.5 crore ($29 million) via an open market transaction on Wednesday.

This is the third portfolio liquidity activity by the PE firm which recently completed its debut exit from South Indian Bank. It has also part-exited from PVR.

Multiples PE sold 2.5 per cent stake in the NBFC and continues to hold 2.17 per cent stake worth Rs 163 crore.

The PE firm had invested Rs 106 crore ($21 million) in the NBFC in the beginning of 2012 and in the part-exit it has pocketed a little over 3x in returns on its just under three-year old investment. It had co-invested with another PE firm Creador Capital which had separately put Rs 106 crore in the company through a preferential allotment at that time.

Multiple PE is raising its second fund of $500 million and has neared its first close of $300 million.

PE firms showcase profitable exits to boost their fundraising activity.

Multiples PE recently completed its debut exit from South Indian Bank. It had invested Rs 165 crore in the bank and exited with around Rs 235 crore in total in tranches, generating an internal rate of return (IRR) of around 20 per cent.

It has also part-exited from multiplex operator PVR. This has been a much more lucrative investment for Multiples PE in terms of returns and is at par with what it has scored with Cholamandalam Investment.

Another financial investor who has booked profits at Cholamandalam Investment counter is IFC, the private investment arm of World Bank.

It has part-exited in two secondary PE deals where it sold some of its shares to WestBridge Capital and Apax Partners.

In March last year, WestBridge Capital picked up 2.1 per cent stake in the company for Rs 86 crore giving a part exit to IFC, which scored 3x in the transaction. Later, Apax Partners also acquired a little over 2 per cent stake in July last year from IFC for around Rs 121.3 crore ($20 million). Apax separately invested Rs 500 crore ($83 million) in the company through a preferential allotment.

Cholamandalam, a financial services arm of Murugappa Group, primarily focuses in the rural and semi-urban sector with 90 per cent presence across tier III and tier IV towns.

Other investors in Cholamandalam include Norwest Venture Partners and Creador.

Shares of Cholamandalam Investment and Finance Company Ltd last traded at Rs 523.15, up 5.52 per cent on the BSE in a weak Mumbai market on Wednesday.

(Edited by Joby Puthuparampil Johnson)

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