Och Ziff-advised fund AMIF I appears to have exited its investment in Kalindi Rail Nirman Ltd (KRNL) at a marginal loss. The fund that had converted its foreign currency convertible bonds (FCCB) into equity worth 8.3% stake in the company in July 2009 sold almost its entire holding for close to Rs 14.5 crore through open market transaction in November.
KRNL, in which engineering giant L&T holds around 14% stake, is into manufacturing and installation of signaling equipment for rail networks.
The exact cost of acquisition of AMIF is not clear, but assuming it subscribed to the FCCBs in March’07 when the company raised around $7 million through FCCBs at a conversion price of Rs 160, AMIF exited at a marginal loss. It sold almost its entire holding at an average price of around Rs 157-158/share.
AMIF also had converted some more FCCBs in September’08 and had made losses when it sold it out at a price of Rs 115/share in November’08. The quantum of loss in this transaction (this was right after the Lehman Brothers collapse which shrunk global stock markets) is estimated at 28% as it pocketed around Rs 5.7 crore against a cost of Rs 7.9 crore for the shares. KRNL also bought back some FCCBs in mid-2009 for the bonds which are to mature in 2012.
Although AMIF made loss on its FCCB investment in KRNL, it gained in another parallel transaction in 2007. AMIF had invested around Rs 24.5 crore in KRNL directly in February’07. The allotment was at a price of Rs 156.5/share. It had pocketed a windfall in this previous investment where it sold outright after completing the one-year lock-in in February’08 (weeks after the stock market crash in late January’08) at a price of Rs 433/share. It had encashed Rs 68 crore or a little less than 3x investment in its one-year-old investment. So, net-net, AMIF still made its money in KRNL.