The management group of Chennai-based Unifi Capital Pvt Ltd Ltd has bought back the stake of private equity firm Peepul Capital as they are looking to shore up their holding in the firm with AUM of over $80 million.
Peepul Capital, which had invested $1 million in the firm, is earning an exit multiple of around 7x on its investment, said sources familiar with the development. While Peepul Capital made its exit this year, the stake of Singapore’s Orion Capital was also bought back sometime ago, said the source.
Unifi Capital, earlier called Unifi Wealth Management, is in the business of managing funds for high net worth families in India and overseas. It currently has assets under management in excess of $80 million, which it plans to aggressively expand to $250 million in the next five years.
Unifi was founded in 2001 and raised funding from Peepul (earlier called iLabs) and Orion Capital in the same year. Both PE firms held a 20% stake each initially, with the promoter-management group led by K. Sarath Reddy holding a 45% stake. The rest of the stake was held by HNIs.
“We are shoring up the stake it would help in aligning the management better with the customer interests, as we enter a new phase in our growth. The management including me holds 78% stake currently, up from 45% when we started. Peepul Capital partnered with us for nine long years, while Orion was with us for over five years. And all of us benefited from it,” K. Sarath Reddy, Founder & CIO, Unifi Capital, told VCCircle. He declined to divulge the financial details of the share buyback from the financial investors.
By effecting the current buyback from Peepul and Orion, the promoter-management stake has gone up 78%.
Unifi provides fund management to the HNIs besides other services, with minimum investment of Rs 25 lakh. The number of millionaires in India has increased by 50% in 2009, according to a recent survey by Merrill Lynch Wealth Management and Capgemini. In India, the number of millionaires has risen to 126,756 in 2009.
While Unifi has been expanding its asset base quietly through referrals in the last decade, it now plans to unleash a brand marketing campaign. Unifi Capital also plans to form sales team in order to tap clients for its focused investment schemes. Some of its recent schemes include Unifi Realty & Related Fund and Delisting Opportunities Fund.
While fund management continues to be the primary focus for Unifi, it has floated a non-banking finance company (NBFC) to do structured transactions for its HNI clients. The company also plans to launch forex advisory business soon. Besides, Unifi Capital also has a small investment banking outfit for its clients which advises on transactions of upto $5 million. Besides headquarters in Chennai, Unifi has offices in Bangalore, Hyderabad, Mauritius and UAE.
This would be the second reported exit for Peepul this year. The PE firm sold its 26% stake in Hyderabad-based IT offshoring firm Intelligroup, which was acquired by Japan’s Data Corporation for $200 million in June. Venture Tech (an investment vehicle of iLabs), along with SAIF Partners had invested a total of $25 million for a majority stake of around 63%.
Peepul, which manages $325 million across two funds, had also invested in Metlife India Insurance Company in 2001. The PE firm’s recent investments include Rs 55 crore in Aqua Designs India Private Ltd, one of the largest regional water and waste water treatment companies in South India. Peepul also recently partnered with Europe’s largest loyalty programme player Payback Gmbh to buy a majority stake in loyalty card provider i-mint.
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