Trikona Trinity Capital Plc, the AIM-listed real estate fund focused on India, is planning to sell stake worth Rs 115 crore in Pipavav Shipyard, whose promoter firm SKIL Infrastructure has announced an open offer. Trikona trinity has also called for an extraordinary general meeting (EGM) on July 30 regarding change in its name to ‘Trinity Capital PLC’. Other issues that would be discussed at the EGM include appointment of a new investment manager and the adoption of a
directors’ incentive plan.
Trikona Trinity, which recently appointed Indiareit as its new investment manager, has tendered 40% of its 6.89% stake in Pipavav Shipyard in the open offer. Interestingly, the shares have been tendered at a significantly discounted price of Rs 61.5 as against Pipavav’s ruling share price of around Rs 100.
But the PE firms’ stake, which is held through Trinity Capital (Nine) Ltd, is in a lock-up period, expiring in October 2010. Trikona Trinity was allowed to participate in the open offer and is recovering the cost of its original investment. While the stake sale will fetch £16.6 million, the mark-to-market value of Trikona Trinity’s remaining stake as at 30 June 2010 was £39.5 million.
The open offer ensued after Punj Lloyd sold its 19.43% in Pipavav Shipyard to its partner SKIL Infrastructure for Rs 656.4 crore ($145 million). SKIL’s stake increased to around 40% after acquiring Punj Lloyd’s holdings. Pipavav Shipyard also recently raised $40 million (Rs 177.80 crore) from PE firm Valiant by issuing compulsorily and mandatorily unsecured convertible debentures.
Trikona Trinity has hastened its exits since last year and realised £36.9 million from stake sales in Phoenix Mills, IL&FS Transportation Networks and Fortis Healthcare. The PE firm is also set to exit DB Hospitaity by end of this month, where it expects to get net proceeds of £14.4 million. The market-to-market value on 30 June 2010 of its stake in DB Realty is £61.3 million, which is subject to lock-up till February 2011.
Indiareit To Get 7.5% Performance Fee
Ajay Piramal Group-promoted Indiareit Investment Management Company (Indiareit) was appointed investment manager from Trikona Trinity in India last month. The move followed Trikona Trinity’s ongoing dispute with its Indian advisors, Trikona Advisors Ltd (TAL), with whom it terminated portfolio management agreement citing breaches in March.
Indiareit will be paid an annual management fee of $2.22 million, $1.89 million and $1.69 million for the first three years respectively. This as compared to the management fee paid by Trikona Trinity for FY10 at $8.9 million.
Indiareit will also get a performance fee of 7.5% of the realised net proceeds. But this would not include exits in DB Realty, DB Hospitality and Pipavav Shipyard. The value of investment on which Indareit is eligable to get a performance fee stands at £130.4 million as of September 2009.
Trikona Trinity has also come up with an incentive plan for board members Martin Adams and Pradeep Verma, who have been actively involved in management since last year. Trikona Trinity said that fees accrued but unpaid up to 30 June 2010 amounts to £642,500 and £450,000
for Adams and Verma respectively.
Under an alternative compensation plan for Adams and Verma, they will get 0.75% of any distributions made by Trikona Trinity prior to its liquidation. It has also been proposed that both these directors get an advance of £250,000 each.