New Delhi, July 1 -- Private equity firm India SME Investments, which focuses on backing small and medium enterprises in the country, is sitting on a neat upside from a recent investment in a manufacturing company, which has secured fresh capital from a new investor.
The Mumbai-based investment firm came in as the first institutional investor in Gujarat-based transformer manufacturer TMC Transformers (India) Ltd in February this year. It infused $10 million into the then-bootstrapped company through its second vehicle, India SME Investments Fund II. The investment valued TMC at around Rs 1,876 crore.
Vadodara-based TMC Transformers is now preparing for a public listing and filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on Tuesday.
The company also secured fresh capital from a new investor last week. It raised Rs 50 crore in equity capital from Motilal Oswal Finvest Ltd, the non-banking finance arm of the Motilal Oswal Group, and its affiliates ahead of the proposed listing, according to its prospectus. The deal valued TMC at approximately Rs 4,260 crore on a pre-issue basis, according to VCCircle's estimates.
According to its DRHP, TMC Transformers plans to raise Rs 550 crore through a primary issue of shares in the initial public offering (IPO). The proceeds will be used to fund its ongoing greenfield extra-high voltage transformer manufacturing facility. Neither the company's promoters nor its investor plans to divest any shares in the IPO.
Even so, for Mumbai-based India SME Investments, the latest funding round reflects a mark-up of about 2.3x on its investment made less than five months ago. The PE firm holds about a 3.95% stake in TMC Transformers.
Led by Hridaynaryn Shukla, TMC Transformers is a grid-scale player that manufactures both oil-filled and dry-type transformers used in substations serving cities, industrial zones, renewable energy parks and large infrastructure projects.
Founded in 2015, the company has since then evolved into a backward-integrated manufacturer with the ability to process steel, a key raw material, in-house. It has an annual manufacturing capacity of 13,500 MVA across oil-filled and dry-type transformers. With in-house engineering and execution capabilities, it serves customers across the railways, renewable energy, industrial, and export segments.
TMC Transformers' revenue from operations grew 54% to Rs 417.2 crore during the last financial year, according to its DRHP. Net profit more than doubled to Rs 95.7 crore.
Published by HT Digital Content Services with permission from VC Circle.