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Exclusive: ChrysCapital books loss from new part-exit

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Private equity firm ChrysCapital, which is in the process of raising its new fund, has hit the exit button on another portfolio firm this year, after part exiting financial services firm AU Financiers Ltd few months ago.

The PE firm has started exiting from a six-year old private investment in public equities (PIPE) deal with a haircut, one of its rare loss-making exit activity.

After booking a loss two years ago in its exit from two construction firms- Gammon India Ltd and NCC Ltd (formerly Nagarjuna Construction Company Ltd), the PE firm has sold half of its holding in Pratibha Industries Ltd.

ChrysCap held 15.04% stake in the Mumbai infrastructure solutions provider focusing on water management and urban infrastructure space, making it the single largest institutional shareholder of the firm. It has sold 7.6% stake over the past few weeks taking a big haircut.

It is estimated to have sold the stake in tranches for Rs 13 crore, losing around three fourth of its investment value, according to VCCircle estimates. Its remaining holding is now worth around Rs 10 crore.

ChrysCap had originally invested Rs 100 crore in Pratibha Industries, a flagship company of the Pratibha Group, through a mix of preferential allotment and QIP participation in 2010. Last year, the private equity firm acquired more shares through secondary market transaction to bring down the cost of ownership of shares, shelling out Rs 15.17 crore (approximately $2.5 million).

An email query to ChrysCap did not elicit response till the time of filing this article.

Pratibha Industries, founded in 1982, focuses on water management and urban infrastructure space. The firm later forayed into manufacturing of SFRC manhole covers & frames, which were designed & introduced as a replacement to the conventional cast iron manholes cover & frames.

The company reported a robust 38% rise in net revenues for the year ended 31 March 2016, to Rs 4,384.8 crore. However, its net profit fell by almost a third to Rs 30 crore last fiscal.

It has been facing a tepid business with revenues sliding 16% in the first quarter ended 30 June to Rs 687 crore. It also reported net loss of Rs 30.15 crore compared to net profit of Rs 16.45 crore in the same period the previous year.

The firm’s shares have lost two-thirds value since January this year.

The firm had also attracted another growth equity investor in the past- Sequoia Capital. Sequoia had invested through secondary market transactions and exited the company two years ago.

ChrysCap investments and exits
Among its recent investment, the home grown private equity firm increasedits exposure in Hindi media publication firm Hindustan Media Ventures Ltd.

In October last year, it also increased its stake in South Indian Bank where it first bought a stake in March last year. ChrysCapital has a large exposure to listed firms and counts a bunch of private banks in its portfolio. It has also backed City Union Bank, Federal Bank and ING Vysya Bank, which has now been merged with Kotak Mahindra Bank.

For ChrysCap, this is the second part-exit in 2016, after it sold some shares of small finance bank licence holder AU Financiers.

In the last one year, it part-exited Ahmedabad-based Torrent Pharmaceuticals Ltd, adding to the list of drugmakers where it has looked to monetise its investments. It had previously exited two privately held drugmakers—Mankind Pharma Ltd and Intas Pharmaceuticals Ltd, through secondary PE deals.

The private equity firm is also working on an exit plan from Ahmedabad-based drug maker Eris Lifesciences Pvt. Ltd.

There have been a total of 198 PE exits in India in the January-October period this year against 263 in the same period last year. Of the total, 79 PE exits have been through the public offering and the open market routes this year as compared with 134 last year.

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ChrysCapital I LLC is a $64 million private equity fund managed by ChrysCapital Investment Advisors India Pvt. Ltd. It provides finance for start-up companies operating in India. The fund seeks to invest in financial and business services, healthcare, pharmaceutical, infrastructure and manufacturing sectors.

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