Mumbai: Private equity firm Oman India Joint Investment Fund (OIJIF) has sold its entire stake in Kotak Mahindra Bank Ltd for over Rs120 crore, said a senior OIJIF executive.
OIJIF, backed by Oman’s sovereign wealth fund State General Reserve Fund (SGRF) and India’s largest lender State Bank of India (SBI), had invested Rs65 crore in ING Vysaya in 2013. Kotak Mahindra Bank acquired ING Vysya in 2015, resulting in OIJIF owning shares in Kotak Mahindra Bank.
“We have completely exited our position in Kotak Mahindra Bank, which resulted in a 2X gain for us,” said Srinath S., chief executive officer, OIJIF.
OIJIF invested in ING Vysya through its first fund of $100 million in 2011 which was completely sponsored by SGRF and SBI.
Kotak Mahindra Bank is OIJIF’s third exit.
“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. Theses exits have seen an IRR (internal rate of return) of 35%, and a multiple of 2.5 times,” said Srinath.
Apart from the Kotak exit, the other complete exit scored by OIJIF was from its portfolio company Solar Industries Ltd. The fund sold its stake in Solar for around Rs260 crore in 2015 and recorded a gain of 3.4x.
The fund also achieved one part-exit in Beaver Engineering, a holding company of HBL Power Systems, at 25% internal rate of return. “We continue to work hands on with our portfolio firms and we are continuously evaluating exit opportunities across the portfolio,” said Srinath.
Other companies in OIJIF’s first fund include footwear manufacturer and retailer SSIPL Retail Ltd, commodity exchange National Commodities & Derivatives Exchange Ltd, agro-chemicals manufacturer GSP Crop Science Pvt. Ltd and electronics boards and systems manufacturer Indus Teqsite Pvt Ltd.
In January, OIJIF said it has hit a first close of $220 million for its second fund - OIJIF Fund II. A first close is the point at which a fund in the process of raising money starts investing.
“The sector focus in the new fund will continue to be the same as in the first fund, though we will be investing in bigger ticket sizes now. We can invest up to $50 million in transactions and we also have a large co-investment commitment from our sponsor SGRF and SBI,” said Srinath.
OIJIF Fund II will be focusing on four sectors - industrials, consumer, financial services and healthcare, he said.
OIJIF Fund II plans to achieve a final close of $300 million for the fund.
With a new and larger fund to manage, the firm is also building out its investment team. OIJIF recently appointed Satish Chavva, as an investment director. Chavva was previously associated with Citi Venture Capital International.
Exits in the Indian PE industry have seen a marked improvement in the last two years.
In 2016, PEs returned $10.3 billion to investors against $9.4 billion in the previous year. The year recorded 199 exit deals for the PE industry. In 2014, the industry had seen exits worth only $6 billion.