Mumbai: Private equity firm KKR-owned oil and gas asset management services platform Joulon has bought a majority stake in Sara Sae Pvt. Ltd, a Multiples PE portfolio company, said two people aware of the development.
Sara Sae, established in 1980, manufacturers hi-tech drilling equipment for land and jack-up rigs and other equipment used for oil well drilling. Joulon was set up by KKR in December 2015 in association with Deepak Munganahalli, an oil and gas industry veteran. Joulon aims to acquire and invest in opportunities through an integrated entity to provide asset management services to the oil and gas industry globally.
The transaction has provided an exit to the Renuka Ramnath-led private equity firm Multiples Alternate Asset Management, said one of the two people cited above, requesting anonymity as he is not authorized to speak to reporters.
In its first deal in 2011, Multiples had acquired a significant minority stake in Sara Sae for an undisclosed amount. According to documents filed with the Registrar of Companies (RoC), Multiples held a 46% stake in the company as of 31 March 2016. Multiples had raised its maiden $405 million fund in 2011.
“Joulon has acquired a controlling stake in Sara Sae through a secondary purchase of Multiples shareholding and an infusion of primary capital. Joulon has invested around Rs46 crore in the company through the primary share purchase. This capital will be used to repay part of the company’s debt,” said the first person cited above.
The transactions value Sara Sae at around Rs220-230 crore post money, he added.
Filings with RoC show that the company’s profit has declined over the last three years from Rs7.4 crore in 2013-14 to Rs49 lakh in 2015-16.
Emails sent Friday to Munganahalli and Joulon vice-chairman and group chief executive Abhishek Kumar went unanswered. Emails sent to Renuka Ramnath and Multiples PE and Sara Sae promoter Vijay Kumar Dhawan too went unanswered.
In December 2015, KKR announced setting up Joulon to pursue investments and investments in the oil and gas services industry. It is led by founder and chairman Munganahalli, an IIT Kanpur and Harvard Business School alumnus, who was previously associated with Transocean Ltd, one of the largest global offshore drilling contractors.
The investment in the platform is being made through KKR Asian Fund II.
“Our goal is to become an integrated solutions provider for engineering, maintenance, repair and overhaul services for asset owners and operators in the oil and gas industry,” Munganahalli had said while announcing the launch of the platform.
After falling almost 37% in 2015, the Brent crude oil price gained 23.3% to $56.8 per barrel in calendar year 2016, data from Bloomberg shows.
According to S&P Global Platts, oil price will continue to trend upwards and this will support increased oilfield service activity. According to Platts, US rig count will grow by an average of 131 rigs or 29% year over year during 2017.
Investments in India’s oil and gas services space has not always turned to be exciting for private equity funds.
In 2007, Citi Venture Capital International (now know as The Rohatyn Group) had picked up around 7% in Shiv Vani Oil and Gas for Rs102.5 crore at a price of Rs375 per share. The company’s last traded share price stood at Rs2.84. Rohatyn still owns a 1.74% stake in the company, data from stock exchanges shows. Shiv Vani offers services in the field of oil and natural gas exploration and production.
Last year, VCCircle reported that private equity fund Samara Capital Partners sold its entire 56.32% stake in Asian Oilfield Services Ltd to Mumbai-based energy exploration company Oilmax Energy for close to Rs30 crore at a loss of over 50%.