Oman India Joint Investment Fund exits Kotak Mahindra Bank

Private equity fund Oman India Joint Investment Fund (OIJIF) has sold its stake in Kotak Mahindra Bank Ltd, netting over Rs 120 crore (around $18.5 million), according to a media report.

OIJIF had got the stake after Kotak Mahindra Bank acquired the fund’s portfolio firm ING Vysya Bank in 2015. It had picked up a stake of less than 1% for Rs 65 crore in the qualified institutional placement of ING Vysya in 2013.

The fund, sponsored by Oman’s sovereign wealth fund State General Reserve Fund and State Bank of India, has a corpus of $100 million.

Kotak Mahindra Bank acquired ING Vysya for Rs 15,000 crore. ING Vysya shareholders received 725 shares of Kotak for every 1,000 shares of ING Vysya they held, as per the merger scheme.

“We have completely exited our position in Kotak Mahindra Bank, which resulted in a two times gain for us,” the report published by Mint quoted Srinath S, chief executive officer, OIJIF, as saying.

“We have made two complete exits and one partial exit so far. With these exits, we have returned around 67% of the capital drawn down from investors. These exits have seen an IRR (internal rate of return) of 35%, and a multiple of 2.5 times,” said Srinath.

PE firms typically chase an IRR of 20-30% in local currency terms.

Besides Kotak Mahindra Bank, OIJIF has exited Solar Industries India Ltd and partly exited Beaver Engineering.

The firm has made investments in sports footwear retailer SSIPL, commodities exchange NCDEX, defence electronics maker Indus Teqsite, battery maker HBL Power and agrochemicals firm GSP Crop Science from the first fund, according to its website.

The PE fund, which first invested Rs 72 crore in explosives and detonator company Solar Industries in 2012, marked an exit in October 2015. The investment firm generated returns of three-and-a-half times in the exit. Solar Industries was its second investment in India. “The fund sold its stake in Solar for around Rs 260 crore in 2015 and recorded a gain of 3.4 times,” Srinath told the newspaper.

The firm also partly exited its investment in Beaver Engineering, the holding company of HBL Power Ltd, in mid-2016 through a promoter buy-back at an IRR of 25%, he said.

Srinath said that, by the end of 2017, the fund would have returned 100% of the initial capital of $100 million.

The firm expects to complete all exits from its first fund by the end of 2019, he said. The first fund will expire in 2021.

Srinath joined OIJIF in 2011. Prior to joining the firm, he worked with South Africa’s FirstRand Bank in India and was head of private equity investing at Reliance Capital.

In January, OIJIF said it has hit a first close of $220 million for its second fund - OIJIF Fund II. OIJIF Fund II will be focusing on four sectors—industrials, consumer, financial services and healthcare—and plans to achieve a final close of $300 million.

To build its investment team, OIJIF recently appointed Satish Chavva as an investment director. Chavva was previously associated with Citi Venture Capital International, according to the report.

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