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Oman India Joint Investment Fund exits Kotak Mahindra Bank

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Private equity fund Oman India Joint Investment Fund (OIJIF) has sold its stake in Kotak Mahindra Bank Ltd, netting over Rs 120 crore (around $18.5 million), according to a media report.

OIJIF had got the stake after Kotak Mahindra Bank acquired the fund’s portfolio firm ING Vysya Bank in 2015. It had picked up a stake of less than 1% for Rs 65 crore in the qualified institutional placement of ING Vysya in 2013.

The fund, sponsored by Oman’s sovereign wealth fund State General Reserve Fund and State Bank of India, has a corpus of $100 million.

Kotak Mahindra Bank acquired ING Vysya for Rs 15,000 crore. ING Vysya shareholders received 725 shares of Kotak for every 1,000 shares of ING Vysya they held, as per the merger scheme.

“We have completely exited our position in Kotak Mahindra Bank, which resulted in a two times gain for us,” the report published by Mint quoted Srinath S, chief executive officer, OIJIF, as saying.

“We have made two complete exits and one partial exit so far. With these exits, we have returned around 67% of the capital drawn down from investors. These exits have seen an IRR (internal rate of return) of 35%, and a multiple of 2.5 times,” said Srinath.

PE firms typically chase an IRR of 20-30% in local currency terms. 

Besides Kotak Mahindra Bank, OIJIF has exited Solar Industries India Ltd and partly exited Beaver Engineering. 

The firm has made investments in sports footwear retailer SSIPL, commodities exchange NCDEX, defence electronics maker Indus Teqsite, battery maker HBL Power and agrochemicals firm GSP Crop Science from the first fund, according to its website. 

The PE fund, which first invested Rs 72 crore in explosives and detonator company Solar Industries in 2012, marked an exit in October 2015. The investment firm generated returns of three-and-a-half times in the exit. Solar Industries was its second investment in India. “The fund sold its stake in Solar for around Rs 260 crore in 2015 and recorded a gain of 3.4 times,” Srinath told the newspaper.

The firm also partly exited its investment in Beaver Engineering, the holding company of HBL Power Ltd, in mid-2016 through a promoter buy-back at an IRR of 25%, he said.

Srinath said that, by the end of 2017, the fund would have returned 100% of the initial capital of $100 million. 

The firm expects to complete all exits from its first fund by the end of 2019, he said. The first fund will expire in 2021.

Srinath joined OIJIF in 2011. Prior to joining the firm, he worked with South Africa’s FirstRand Bank in India and was head of private equity investing at Reliance Capital.

In January, OIJIF said it has hit a first close of $220 million for its second fund - OIJIF Fund II. OIJIF Fund II will be focusing on four sectors—industrials, consumer, financial services and healthcare—and plans to achieve a final close of $300 million.

To build its investment team, OIJIF recently appointed Satish Chavva as an investment director. Chavva was previously associated with Citi Venture Capital International, according to the report.

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Oman India Joint Investment Fund is a $100 million private equity fund managed by Oman India Joint Investment Fund - Management Co. Pvt. Ltd. It provides growth capital to companies operating in India and Oman. The fund seeks to invest in oil and fertilizers, education, healthcare, hospitality, retail, pharmaceutical, chemicalreal estate, information technology, tourism, and infrastructure sector. It typically invests $10 million and $15 million in its portfolio companies. The fund operates as a 50:50 joint ventures between State General Reserve Fund (SGRF) of Oman and State Bank of India.

(Kotak Mahindra Bank)

Kotak Mahindra Bank Ltd. (formerly known as Kotak Mahindra Finance Ltd.) is engaged in providing banking and financial services to individuals, entrepreneurs, business families, and employed professionals. It offers banking solution that include personal banking (including savings account, current accounts, term deposits, loans, etc.); non-resident banking (including non-resident accounts and deposits, money transfers, loans, investment and insurance, etc.); privy league (including personal banking, business banking, special services, financial planning, etc.); wealth management, small and medium enterprises banking (including accounts, loans and overdrafts, working capital finance, dealer finance, trade services, etc.) and wholesale banking (including funded products, not-funded products, treasury products, investment products, etc.). The firm provides loans for car, home, personal, education, tractor, loan against property, rural auto, farm equipment, home improvement loan, home loan balance transfer, gold loans, commercial vehicle loan, loan against securities, construction equipment, infrastructure and innate auto finance; card facilities such as debit, credit, prepaid cards etc; investment and insurance services; financial inclusion, convenience banking and private equity. The company was incorporated in 1985 and is based in Mumbai, Maharashtra.

Head office:
Mumbai
Year Founded:
1985
Website:
Management:
Uday Suresh Kotak

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