Nalanda Capital has increased its holdings in Exide Industries to 5.01 per cent, according to a company disclosure to the Bombay Stock Exchange. The private equity firm, which focuses on public-listed Indian companies, already held 4.59 per cent stake as on December 31, 2011. It boosted its holding marginally in the past few weeks to 4.91 per cent and bought 0.10 per cent afresh to take the total holding to 5.01 per cent.

Nalanda Capital is estimated to have invested around Rs 40 crore ($8 million) this month to acquire the additional 0.42 per cent in Exide.

At 12:51 pm, shares of Exide Industries were trading at Rs 127.80 on the BSE, up 1.59 per cent from the previous close.

At this price, Nalanda’s existing equity stake is worth around Rs 544 crore or $106 million.

Nalanda started building its exposure in Exide, the country’s largest battery maker, around one year ago and held a little over 1 per cent as of March 31, 2011. It bought more shares in the three months ended June 30, 2011, and once again bought a chunk of shares in the last quarter.

According to VCCircle estimates, Nalanda Capital has invested a total of over Rs 510 crore ($100 million) in the company over a period of time, making Exide its biggest portfolio company in terms of exposure.

Nalanda’s heavy bet on Exide is interesting, given the level of exposure. The Singapore-based PE firm, founded by former Warburg Pincus India MD Pulak Prasad, has around $875 million under management through two funds and Exide comprises around 11.5 per cent of its total assets.

Kolkata-based Exide manufactures and sells lead acid storage batteries for automotive, industrial and submarine applications. It is the largest player in the business and much ahead of the No. 2 firm Amara Raja Batteries, which is backed by Sequoia Capital.

Nalanda Capital’s Strategy

Part of the latest investment could be to average out the high cost of acquisition per share in Exide early last year. But the latest initiative is in line with the PE firm putting fresh money in its existing portfolio companies as stock market valuations have tanked to near two-year low.

Last week, Nalanda Capital increased its stake in Ratnamani Metals and Tubes Ltd to 10.47 per cent. The firm has been building its exposure to the steel tubes and pipes maker Ratnamani since early 2010. Its holding crossed 1 per cent in the quarter ended June 2010 and it had been slowly increasing its exposure in the firm ever since.

A fortnight ago, the firm also bought an additional 0.16 per cent in Great Eastern Shipping Company. The PE firm had been building stake in Great Eastern Shipping for the past six months. It had apparently acquired 2.14 per cent stake in the shipping firm during July-September quarter and hiked it to 4.95 per cent by December 31, 2011.

Last November, Nalanda Capital had increased its holding in AIA Engineering Ltd (which manufactures and designs engineering components) to 6.3 per cent. The PE firm acquired the additional 1.2 million shares or 1.27 per cent stake for a total consideration of Rs 37.2 crore. This had taken its total exposure to the company to around Rs 200 crore.

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