Sequoia Capital exits TD Power with average IRR; Ronnie Screwvala among others buy

Sequoia Capital has exited its over three-year-old investment in power equipment maker TD Power Systems Ltd through an open market share sale on Thursday. It sold its entire stake in the company, pocketing around Rs 79.5 crore ($6.38 million) in the process.

Part of the shares were acquired by media industry veteran Ronnie Screwvala who is now a private investor in various firms.

Sequoia had bought around 4.52 per cent of TD Power in two tranches in 2011 through its affiliate Ironwood Investment Holdings. It is estimated to put around Rs 50 crore or close to $10 million.

It originally picked shares at the time of its IPO and pitched in along with others like Baring India PE and India Value Fund Advisors. Baring and Sequoia had come in as the anchor investors in the issue.

TD Power had raised Rs 227 crore from its maiden offering of which 40 per cent was subscribed by private equity firms at that time.

After it listed Sequoia acquired more shares through open market share purchases to raise its holding.

It is estimated to have exited with around 15 per cent internal rate of return (IRR) in local currency and a modest 5 per cent IRR in dollar terms.

It is not the first alternative investment firm to have exited the company. Infosys' chairman emeritus NR Narayana Murthy's private investment firm Catamaran Ventures, which invested approximately Rs 9.15 crore in TD Power in 2013, exited its investment three months ago via open market transaction. It garnered a return of a little over 1.4x and estimated IRR of just over 26 per cent on its one-and-a-half-year-old investment.

Founded in 1999, TD Power went public in mid-2011. It manufactures AC generators for steam turbines, gas turbines, hydro turbines, diesel engines, gas and wind turbines. It's subsidiary DF Power Systems Pvt Ltd is in the business of engineering, procurement and construction.

TD Power Systems' scrip closed at Rs 435.80 each, down 2.74 per cent on BSE in a strong Mumbai market on Thursday.

For Sequoia, this marks the 10th full or partial exit over the last one year, as per data compiled by VCCEdge, the data research platform of VCCircle.

Most recently, it part-exited Mumbai-based Lovable Lingerie Ltd by selling 1.62 per cent stake.

Prior to that, the multi-asset investment firm fund exited its investment in Mumbai-based infrastructure solutions provider focusing on water management and urban infrastructure space Pratibha Industries Ltd, a flagship company of the Pratibha Group.

It has also fully or partly exited ventures like Just Dial Ltd, Dexetra Software Solutions, Bubbly, Sourcebits and What's On India. It scored a multi-bagger with Just Dial.

(Edited by Joby Puthuparampil Johnson)

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