PE firm New Silk Route made 2.25x in part-exit from VRL Logistics

Goods and passenger transport services provider VRL Logistics Ltd has fixed the issue price of its oversubscribed public issue at Rs 205 a share, the upper end of the price band of its initial public offer (IPO). This has resulted in a neat 2.25x in returns for its private equity investor New Silk Route (NSR), which part-exited out of the three year-old investment in the public float.

VRL Logistics closed its IPO with 73x oversubscription early this month. This is the biggest oversubscription number in seven years for a primary market issue beating Reliance Power's issue in February 2008.

Earlier, VRL Logistics had raised about Rs 140 crore (nearly $22 million) ahead of the IPO from a bunch of domestic and foreign investors which came as anchor investors, including Abu Dhabi Investment Authority.

VRL Logistics is the fourth company to hit the capital market with an IPO this year and the first to see bumper participation from investors.

NSR, which held 19.25 million shares representing 22.5 per cent stake in VRL before the IPO, divested over two-thirds of this comprising around 14.55 million shares in the offer for sale.

The company had set a price band of Rs 195-205 for the IPO to raise as much as Rs 492 crore (approximately $80 million) through a fresh issue of shares besides an offer for sale by the promoter family and its existing investor NSR.

The PE firm had put in around Rs 175 crore to buy the stake in 2011-12. It invested Rs 125 crore through a preferential allotment and bought shares worth Rs 50 crore from one of the promoters.

It has encashed around Rs 300 crore in the issue and at the issue price its remaining stake is worth around Rs 96 crore.

An email query to NSR spokesperson on the development went unanswered.

VRL shares are expected to be listed on stock exchanges this week.

This should come as a booster for NSR which had a poor show with another portfolio firm which went public.

Last month, it part exited Ortel Communications by selling half of its holding. Initially, it was looking to part exit Ortel but had offered to sell its entire holding when Ortel filed its draft red herring prospectus (DRHP) last September, and again changed its plan and offered to sell around three-fourth of its holding as part of the offer for sale.

However, it had to cut down its offer-for-sale portion after the IPO of Ortel Communications failed to attract investors. The issue managed to sail through after the overall issue size was reduced wherein NSR cut the number of shares it sold from targeted 6 million to around 3.67 million. The share price of Ortel has declined since listing.

(Edited by Joby Puthuparampil Johnson)

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