Mumbai: Private equity veteran Ajay Relan’s new fund, Xponentia Capital Partners, which invests in mid-market growth companies, is in talks to invest $10 million in pilot training institute Flight Simulation Technique Centre (FSTC), said two people aware of the development.
“Xponentia is in advanced talks to invest ₹ 75 crore (approximately $10 million) in FSTC, which is currently the largest independent pilot training simulator service provider in the country. It is currently operating five flight simulators and has close to one-third market share," said the first person cited above, requesting anonymity. “The PE firm will pick up a significant minority stake of around 30% in the company."
The second person, also requesting anonymity, said the investment allows Xponentia an indirect exposure to the Indian aviation business, while avoiding the volatility that is associated with the sector.
“It is a large market opportunity with strong growth drivers such as fast rising passenger traffic and airlines adding capacity to their fleet. In addition, it allows one to participate in the growth of the Indian commercial aviation sector without taking exposure to volatilities such as fuel price movements."
Xponentia Capital declined to comment. “We are in discussions," said D.S. Basraon, FSTC founder, declining to give further details.
Xponentia was incorporated in November 2018 by Relan, Devinjit Singh, the former managing director with American PE firm Carlyle’s India team, and P.R. Srinivasan, the former India head of Citi Venture Capital International.
Founded by former air force official Basraon, Gurugram-based FSTC is a leading provider of training support to aviation professionals and airlines.
This will be Xponentia’s second investment so far. In August, private equity firms Samara Capital and Xponentia had acquired express logistics firm, Spoton Logistics, in a ₹ 550 crore deal with India Equity Partners.
FSTC’s clients include Jet Airways, SpiceJet, IndiGo and Vistara, besides the Indian Navy, according to its website.
For the fiscal ended 31 March, 2018, FSTC had recorded standalone revenue of ₹ 81 crore, against ₹ 78.4 crore in the previous year, according to the company’s documents with the registrar of companies (RoC). It had reported profit of ₹ 4.7 crore in 2017-18, compared to ₹ 7.4 crore in the previous fiscal, data shows.
Before setting up Xponentia, Relan had founded PE firm CX Partners, which had raised $550 million in 2009. CX partners had invested in diagnostic chain Thyrocare, small finance bank Ujjivan, security and facility management company SIS Security Services, and BPO company Minacs, among others. Relan had also founded Citi India Private Equity in 1996.
Devinjit Singh was a managing director with Carlyle Asia Partners in India since 2008. Carlyle has invested in several Indian companies, including PNB Housing Finance, HDFC, IIFL, and SBI Cards. Before joining Carlyle, Singh had a stint in Citibank.