Standard Chartered Private Equity(SCPE) has hiked its equity stake in Mahindra & Mahindra Financial Services by 2%. The private equity firm bought shares from the open market to take its holding to 7.4%. The exact date of transaction is not clear but given the average share price over the last one quarter the PE firm would have shelled out close to Rs 36 crore($ 7.2 million) for this additional equity stake.
What is interesting is that now SCPE’s cost of acquisition of this equity stake is much lower than that of TPG Axon. Both the firm had picked up minority stake through a preferential allotment in March 2008. While TPG had picked 7.22%, SCPE had picked around 4% at a price of Rs 380 per share. Together the two PE firms had pumped in Rs 415 crore through the preferential issue.
SCPE had acquired more shares from the open market in March and as per latest disclosures to the stock market has taken its holding to 7.45%, marginally higher than that of TPG Axon.
VCCircle calculations show that the average price per share for SCPE works out to around Rs 305/share 20% lower than TPG Axon which has chosen to maintain its holding.
The sharp drop in valuations in the financial space has not spared M&M Financial Services. The stock is down 40% from the levels in the first quarter of 2008. The biggest loser in the deal is TPG Axon whose holding value has more than halved in less than a year.
The stock is now trading below its IPO price. M&M Financial had gone public in March’06. The IPO price was Rs 200 and the issue was subscribed 26.88 times.
Part of Mahindra Group, M&M Financial Services is a non-banking finance company focused on the rural and semi-urban sector. It provides loans for utility vehicles, tractors and cars. For the half year ending September’08, the company reported 17.5% increase in income from operations which stood at Rs 630 crore. Consolidated net profit of the firm rose marginally by 5% to Rs 64 crore for H1’09.