Tata Capital, the financial services arm of the Tata conglomerate, has invested Rs 70 crore from its growth capital fund in the recently listed Commercial Engineers & Body Builders Co Ltd (Cebbco).
Tata Capital Growth Fund I picked up a 14% through secondary transactions before the IPO this year. The sellers included PE firm New York Life Investment Management India Fund (FVCI) II (NYLIM II) and the promoters of the firm. This stake would have got diluted after the issue.
Akhil Awasthi, managing partner of Tata Capital's growth fund, has joined Cebbco board as a nominee director. Tata Capital is currently raising a $500 million growth capital fund of which 25% has already been raised from domestic investors. Tata Capital has tied up with Japan’s Mizuho Securities to raise the rest.
Cebbco, which was listed earlier this month on the bourses, is into manufacturing vehicle bodies for commercial vehicles, refurbishment of wagons and manufacturing of components for wagons, coaches and locomotives.
While NYLIM II sold a 4.68% stake, the promoter group entities sold a 9.32% stake. The shares were sold at Rs 116.56 per share. Cebbco, which raised Rs 172 crore through its maiden offer, had issued the shares at Rs 127 in the public offering. While the stock debuted at a premium, since then it has slipped and is currently trading at Rs 106.80.
Interestingly, the country’s largest commercial vehicle maker Tata Motors is also the largest client of Cebbco. Tata Motors accounted for 52.46% of Cebbco's net sales in FY10 at Rs 96 crore. In FY09, it accounted for 69% of the net sales at Rs 77.6 crore. Cebbco's other clients include Man Force Trucks, Indian Railways, BHEL, etc.
The firm has grown at a compounded annual growth rate (CAGR) of 39.3% since 2006 with revenues increasing from Rs 52.3 crore to Rs 197 crore in FY10.
Cebbco is promoted by Jabalpur-based Gupta family led by Kailash Gupta and Ajay Gupta (son-in-law of Kailash Gupta). The group business is largely associated as collection and recovery agents besides dealerships for vehicles made by Tata Motors in Madhya Pradesh and other part of states adjoining central India.