The shares of packaging firm Ess Dee Aluminium Ltd rose over 15 per cent on Monday after Sequoia Capital India sold most of its 6.77 per cent stake in the firm on Friday. According to VCCircle estimates, Sequoia Capital has exited the investment for a loss of at least 60 per cent.
Sequoia Capital has been active in public markets since 2008 and has made nearly a dozen such investments. While it made handsome returns on bets like NCC Ltd and Cognizant, besides sitting on multi-baggers like eClerx, this would be one of the bets that did not work out.
Sequoia Capital, through Ironwood Investment Holdings, sold 2.09 million shares at Rs 135 per unit on Friday at Bombay Stock Exchange and National Stock Exchange. The shares were sold for an aggregate sum of Rs 28.25 crore. Sequoia still has nearly 80,000 shares in the Mumbai-based firm.
The shares of Ess Dee Aluminium Ltd were trading at Rs 164.50, up by 14.87 per cent at 11:21 AM on the BSE on Monday. The shares of the firm shot up over per cent to Rs 165 in early trade.
Sequoia Capital had started picking up stake in Ess Dee in early 2011 and increased its stake to 6.77 per cent or 2.17 million shares by September 2011. Sequoia picked up around 1.5 million shares in Jan-March' 11 quarter, when shares of Ess Dee were trading in the Rs 395-454 range. The next block was picked up in August 2011 for around Rs 240 per share.
This puts Sequoia Capital acquisition cost Rs 75-85 crore, which would mean a 60-65 per cent loss considering sale of remaining shares.
An e-mail sent to Sequoia Capital spokesperson did not elicit an immediate response.
Ess Dee is headed by first-generation entrepreneur Sudip Dutta who holds 59.5 per cent stake in the firm. Current investors in the company include ICICI Prudential Life Insurance and Orange Mauritius Investments.
Ess Dee supplies materials to pharmaceutical packaging industry and also supplies to the FMCG packaging segment. The company reported a 43 per cent fall in net profit to Rs 68.1 crore in FY12 with revenues falling marginally by 3 per cent to Rs 660 crore.
(Edited by Prem Udayabhanu)