Tano Capital is making part exit from its four year old investment in valve maker Virgo Engineers with an estimated 2.3 x returns. Virgo is looking to raise around Rs 350 crore through fresh issue of shares in addition to offer for sale by Tano and a clutch of individual

investors in the company.

Tano is estimated to have put in a total of around $10-12 million in Virgo Engineers partly by subscribing to fresh shares and the rest by purchases through promoters and other individual investors. It owns 9.69% stake in the company pre issue and has put a quarter of its shares up for sale.

Its average cost of acquisition is pegged at around Rs 140 per share as against expected issue price around Rs 325.

Virgo manufactures and supplies various types of ball, triple offset, gate and check valves as well as steam products and have a significant customer base in the oil and gas (including refining and petro-chemical) industry. It also supplies to customers in the infrastructure (including pipelines and storage terminals) and process industries (including paint, pharmaceuticals, chemicals, dyes, dye intermediates and fertilisers).

Founded in 1987 by co-promoters Mahesh Desai and V Balasubramanian, the company commenced manufacturing operations in Pune in 1990, Milan in 2006, Coimbatore in 2008, and Houston in the United States last year. Last year it also acquired manufacturing facilities for steam products in Bremen, Germany. As of June 15, 2010, it had orderbook

size of Rs 434.5 crore.

For the year ended March’10 it had revenues of Rs 673 crore with net profit of Rs 87 crore. It derives just a quarter of revenues from India with US being its biggest market accounting for a third of total business, followed by Middle East and Europe.

Virgo plans to use  a large part (~Rs 250 crore) for expanding existing manufacturing facilities besides setting up new units. The remaining money is to be used for repayment of a portion of the debt and spends on IT infrastructure.

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