New Delhi, July 1 -- Creador, the South- and Southeast Asia-focused private equity firm founded by Brahmal Vasudevan, has sold its entire remaining stake in an India portfolio company it backed seven years ago after making a partial exit last year.
The PE firm, which is deploying its sixth fund that marked the final close last year after exceeding its hard cap, sold a 10.43% stake in iValue Infosolutions Ltd on Tuesday via open market transactions, stock-exchange data show. It pocketed Rs 148.3 crore (about $15.6 million) from the share sale, back-of-the-envelope calculations show.
Bengaluru-based iValue, an enterprise IT services company, floated its initial public offering in September last year. The IPO involved an offer for sale by its promoters, Creador, and some individual shareholders. It didn't issue any new shares. The IPO size was Rs 560.29 crore and valued it at Rs 1,600 crore at the issue price of Rs 299 per share.
Creador sold nearly two-thirds of its 30.53% stake in iValue during the IPO and mopped up Rs 329.3 crore. Ahead of the IPO, it also sold a small portion of its stake in iValue to the company's founders and other existing individual shareholders at a deep discount. The two partial exit moves helped the PE firm to generate an internal rate of return (IRR) of 24-25% in rupee terms, according to VCCircle estimates based on the first-in, first-out methodology.
Overall, Creador's harvest from iValue totals to about Rs 487 crore, or about $54 million based on the forex rates prevailing at the time of the share sales. It had invested Rs 125 crore ($18 million) in iValue in May-June 2019, valuing the company around Rs 400 crore. This means it has scored an overall multiple on invested capital of about 3.9x and an IRR of about 23% in rupee terms, VCCircle estimates show. Its IRR in dollar terms, which is more relevant for Creador since it raises most of its money outside India, would be around 18-19%.
This means Creador has beaten the IRR benchmarks of 20% in local currency and 15% in dollar terms.
However, Creador's returns from the latest tranche of the share sale are a tad lower because of the drop in iValue's shares since listing. The shares closed at Rs 273.85 apiece on the BSE on Tuesday, 8.4% below its IPO price.
VCCircle estimates based on the FIFO methodology show that Creador's IRR from this week's exit move would be a tad above 20% in rupee terms and 15% in dollar terms, just about meeting the benchmarks.
Founded in 2008, Bengaluru-based iValue is a distributor of IT hardware and software and also provides consultancy services. The company makes 30% of its topline from hardware distribution and consultancy, while 70% comes from software distribution and consultancy. It distributes over 300 products, including cybersecurity systems, network monitoring tools, unified storage, and integration solutions, bundled with hardware, software, and services.
Creador's dealmaking activities
Kuala Lumpur-based Creador, which has operations in India, Indonesia, Malaysia, the Philippines, and Vietnam, invests in sectors such as financial services, consumer, healthcare, business services and manufacturing. The firm invests in the mid-market segment, with cheques of up to $70 million.
The PE firm marked the final close of its sixth fund in January last year at $930 million (Rs 8,045 crore then), after breaching the hard cap of $850 million, its founder and CEO Brahmal Vasudevan said at the time. This took the firm's assets under management above $3 billion.
Creador has lined up another exit from its India IPO. It aims to mop up Rs 800 crore by selling its stake in Paras Healthcare Ltd through the hospital chain's planned IPO. Last year, it offloaded part of its stake in Paras via a pre-IPO transaction. The PE firm also invested in a couple of Indian companies last year. These included pharmaceutical company La Renon and non-bank lender IKF Finance.
Published by HT Digital Content Services with permission from VC Circle.