Multiples Alternate Asset Management, a private equity firm floated by former ICICI Venture CEO Renuka Ramnath, has closed its second deal by picking a majority stake in Nov Sara, a Dehradun-based equipment maker for oilfields, for $30 million (Rs 135 crore), a source close to the deal has said.
The majority of the monies raised will be used to buy out the stake of the foreign partner STS Products, the source has added.
An e-mail message sent to Renuka Ramnath, CEO of Multiples Alternate Asset Management Pvt Ltd, to confirm the development did not elicit any response till the time of writing this article.
Founded by first-generation entrepreneur VK Dhavan in 1979, Nov Sara supplies key equipment for oil rig manufacturing to domestic and international oil firms and has an enterprise valuation in the range of Rs 200-Rs 250 crore. The company manufactures products like hydraulic tongs, hammer unions, ring joint gaskets etc.
Houston-based STS Products Inc. supplies oil field products like hammer unions, swivel joints, swivel joint loops, pipe joints, Integral union connections, spools & adapters, flanges, tees, crosses, ring joint gaskets, frac subs, studs, nuts, BOP accumulator units, remote panels hydraulic tongs, power units, high pressure test units, pressure wash units, manifolds and sucker rod pumping units.
Multiples had recently held a second close for its debut fund at $350 million from domestic and international investors. Renuka Ramnath who went solo to set up her private equity venture Multiples Alternate Asset Management, has had a first close of its PE firm at a not-too-modest $250 million.
Multiples struck its debut deal recently by participating in a consortium of investors who infused $64 million into Dhanlaxmi Bank, a Thrissur-based private bank. The bank raised Rs 290 crore ($64.4 million) by selling 19.6 per cent stake through a preferential allotment to a group of private equity investors and Customers Bancorp Inc., a US banking services firm, backed and led by Jay Sidhu. Incidentally, Sidhu is a US-based banker of Indian origin who led the rise of Sovereign Bancorp into one of the largest US regional banks before being ousted from the organisation.
Oil accounts for around a third of India’s total energy consumption and there is unlikely to be any significant scaling down of dependence on the fuel in the medium term. India will account for 12.59 per cent of Asia Pacific’s regional oil demand by 2014, while providing 10.13 per cent of supply, according to the Business Monitor International’s ‘India Oil and Gas Report Q4 2010.’ The regional oil production was estimated at 8.82 million barrels per day (b/d) in 2010, as compared to 8.35 million b/d in 2001. Also, gas consumption is set to rise from an estimated 63 billion cubic metre (BCM) in 2010 to 110 BCM, with domestic supply up from around 45 BCM in 2010 to at least 70 BCM by 2014.
This has spelt a host of opportunities for engineering and services companies in these areas and some of them have also seen private equity interest in the past. In one of the largest deals in this space, Great Offshore Ltd, an integrated offshore oilfield services provider to upstream oil and gas producers (they carry out offshore exploration and production activities) raised $41.1 million from Carlyle Asia Growth Partners III. In another deal in the same space, GEI Power Ltd, a manufacturer of structural items for power plants, transmission towers and sub-assemblies for power plant, raised $2.15 million from Banyan Tree Growth Capital in 2009.
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