Subhkam Ventures’ is hiking stake in small sized floriculture company Nagarjuna Agri Tech by converting its warrants into equity paying 80% premium to the ruling stock price. Subhkam already owns 29% stake in the company pursuant to a preferential allotment in November’08 and part conversion of warrants early last year and with the stake hike its holding will go up to 33%, marginally ahead of the promoter group of Nagarjuna Agri Tech.
Subhkam Ventures, established over 10 years ago by Rakesh Kathotia, a first generation entrepreneur, is converting warrants into equity at a price of Rs 10/share. As against this the current share price of Nagarjuna Agri Tech is Rs 5.55. It is not clear why the investment firm is paying such a high premium.
In November 2008 Subhkam was allotted 20 lakh shares at a price of Rs 10 each along with 20 lakh warrants convertible into equity at the same price. In March’09 Subhkam converted 4.04 lakh warrants into equity. After the latest conversion it would continue to own around 11.7 lakh warrants which could potentially give it around 40% stake post conversion.
Subhkam’s total investment(including the latest warrant conversion which wll happen soon) till date is pegged at Rs 2.8 crore which is valued at Rs 1.6 crore ie, a haircut of around 43%.
Originally Subhkam had struck a deal to pick stake in Nagarjuna Agri Tech in 2006 and had even come out with an open offer at that time to buy stake at the same price of Rs 10/share. But it managed to buy less than 2% stake in the open offer. In the following year the stock price had hit a high of around Rs 30/share.
For the quarter ended September’09 Nagarjuna Agri Tech had revenues of Rs 41.9 lakh with net loss of Rs 15.2 lakh. The company will be valued at Rs 4.9 crore post conversion of the second tranche of warrants into equity by Subhkam.
Subhkam targets investments in midsize companies, providing growth capital. Its investments are spread over a diverse range of industries such as infrastructure, bio-technology, financial services, aerospace, telecom, real estate, tourism, waste management and healthcare, among others. Some of its portfolio companies include MSK Projects, Unicon Financial Intermediaries, Sterling Holiday, Nagarjuna Construction, Gulf Oil, Midvalley Entertainment, Bharat Biotech and Ansal Housing & Construction.