StanChart PE to use IPO door to part-sell Endurance stake

MUMBAI: Standard Chartered Private Equity (PE) plans to sell a portion of its 13.7% stake in auto component maker Endurance Technologies in a proposed initial public offering (IPO) in January. The Aurangabad-based company aims to raise Rs 1,000 crore through the IPO to expand and retire debt, according to investment bankers familiar with the matter.

Endurance plans to issue 1.31 crore shares, or 25%, of its equity with a face value of Rs 4 apiece at Rs 750-800 per share in the IPO, valuing the firm at . 4,000 crore, post-dilution. Standard Chartered PE, which invested about Rs 190 crore in the company in two tranches, may get roughly . 450 crore in the IPO. Kotak Mahindra Capital and Citigroup Global Markets are lead managers to the issue.

Standard Chartered Private Equity’s Nainesh Jaisingh and Endurance officials declined to comment on the matter.
Endurance, which counts Fiat Group, Daimler AG and Audi AG among its clients, posted total income of Rs 2,409 crore in J2009-10 . The company’s debt stood at Rs 1,049 crore.

The recent revival in the auto and components sectors has resulted in many firms looking to raise money to repay debt and, in some cases, fund expansion. Other auto component makers such as Kabirdass Motor Company , Commercial Engineers and Innoventive Industries are also planning IPOs, according to investment bankers.

The surge in the stock market to record levels in recent months has many PE firms looking to trim or sell their stakes in unlisted firms. Many of such investments were done during the peak of the previous bull run in 2007. PE firms have already trimmed their stakes in listed firms through market sales.

“Given the rapidly rising public markets and strong prospects for IPOs, this is probably a better time for PE investors to focus on exits rather than place big investment bets,” said Arun Natarajan, managing director & chief executive of Venture Intelligence, a private equity industry tracker.

Private equity firms sold investments in 27 Indian companies during in the July-September quarter, including two through IPOs (that of Gujarat Pipavav Port and MakeMytrip .com), according to a recent Venture Intelligence note. In the same period of 2009, they sold stakes in 23 companies, including two IPOs.

“For the first time since Q1’09, the amount invested by PE firms has dipped when compared with the immediate previous quarter ,” Mr Natarajan said, in a note.