Mumbai: British private equity (PE) fund Henderson Equity Partners has started talks to sell its stake in Delhi-based development consulting firm IPE Global Ltd, two people aware of the development said.
Henderson has hired Axis Capital to find buyers for its stake, the first of the two persons said, adding that the fund has started talks with PE funds and strategic investors.
“The fund is looking to get around Rs.150-200 crore for its over 20% stake in the company. They are looking at a valuation of up to Rs.800 crore,” this person added, requesting anonymity as the talks are private.
According to the second person cited above, Henderson started looking for a buyer after IPE Global shelved its plan to sell shares to the public.
“The company was last year working on a plan to go public. The initial public offering (IPO) was supposed to be the exit route for Henderson. They had also hired a couple of investment banks for the same. However, that plan was shelved later as they realized that it was early for the company to go public,” he said, requesting anonymity.
Henderson declined to comment on the matter. Emails sent to IPE Global and Axis Capital on Friday went unanswered.
Henderson had invested around $10 million in the company in 2011 from its fund Henderson Asia Pacific Equity Partners II. The fund, with more than £92.7 billion of assets under management, had more than 1,000 employees in 19 countries as of 31 March 2016.
IPE Global is a development consulting group that provides technical assistance and solutions for development projects.
Founded in 1998 by London School of Economics alumni, the company assists development and aid agencies, public sector clients and not-for-profit organizations across the developing world in South Asia, parts of Africa and West Asia.
It employs 800 people and has over 1,000 empanelled consultants working on various international projects. It has implemented 700 projects in over 100 countries, according to the company’s website, and works on health, urban development, education and infrastructure, among others.
According to data from the registrar of companies, IPE Global reported a consolidated revenue of Rs.289.8 crore in 2014-15, up from Rs.196.8 crore a year ago and a profit of Rs.29.5 crore, compared with a profit of Rs.20.4 crore a year ago.
According to data from private equity and venture capital database Venture Intelligence, Henderson has invested around $174 million in seven Indian companies between 2004 and 2011.
IPE Global was Henderson’s last investment in India in 2011.
Henderson has so far sold four of these investments—Hindustan Sanitaryware and Industries Ltd, HT Media Ltd, Jubilant Life Sciences Ltd and Sharda Cropchem Ltd.
On 4 July, Mint reported that another Henderson portfolio firm—Genesis Colors Pvt. Ltd—is planning to go public, a move that will help the PE sell its shares. In 2009, the PE fund had invested Rs.80 crore in Genesis Colors.
Henderson’s attempts to sell its remaining investments come at a time when the environment for such sales has transformed in the last one-and-a-half years.
While 2015 witnessed all-time highs for both PE investments and exits due to renewed interest in India as an investment destination, 2016 got off to a slower start. The first six months of 2016 witnessed 84 PE exits worth almost $3.79 billion, according to data from Venture Intelligence, far below the $5.91 billion worth of exits across 139 deals in the same period last year. Overall, 2015 saw 254 exits worth $9.3 billion.
However, the overall exit scenario for PE funds continues to remain healthy, an expert said.
“In the last 12-15 months, the PE exit scenario has improved a lot, which will encourage PE funds to invest more in India. The momentum in exits should continue as the overall macroeconomic situation looks favourable; there is good amount of optimism on the Indian economy,” said Harish H.V., a partner at Grant Thornton India Llp.
In terms of quantity, the number of deals, secondary sales to other PEs and sales to strategic investors will be the most popular exit route, he said. “IPOs, too, are happening actively and PE funds have managed to register reasonable exits through IPOs. Though IPO exits will be fewer, we have seen a phenomenal return in the number of IPOs that are happening, compared with 3-4 years ago,” Harish added.