TVS Cap Buys 3% Stake in IEX from Bessemer Venture

Deal valued at Rs 75 cr; Bessemer makes 7-fold return on its investment in IEX
Even as the Multiples PEled consortium is trying to buy a 24% stake in Indian Energy Exchange from Jignesh Shah’s Financial Technologies, TVS Capital has bought 3% stake from Bessemer Venture Partners for ` . 75 crore, valuing the company at ` . 2,500 crore. Bessemer will make seven times returns on the investment with this exit, said three people directly involved in the deal.TVS Capital, that was part of the consortium with Multiples to purchase 24% stake in India’s largest electricity exchange by volume, went ahead and bought the stake from Bessemer Venture Partners which had invested in the company in 2010. The company was valued at . 350 crore at that time.` “Bessemer has made around seven times returns on its investments in IEX,“ one of the persons involved said. Bessemer, along with Lightspeed Venture Partners, had acquired stake from PTC Financial Services for . 70 crore. Bessemer continues to hold ` around 6% in the company .

When contacted, Vishal Gupta, managing director, Bessemer Venture Partners India, confirmed the sale of stake in IEX to TVS Capital. Gupta will continue to be a director on the board of IEX even post the transaction.

Some of the other investors in the company include Aditya Birla PE, Multiples Private Equity Fund, Adani Enterprises, Jindal Power, Lanco Infra, Reliance Infra, Rural Electrification Corporation, Tata Power and lender IDFC. PTC continues to hold around 5% stake in the company .

Former Aditya Birla PE chief executive Bharat Banka acted as the sole advisor to the deal. After quitting Aditya Birla PE, Banka is advising various business houses, funds and startups. With a shareholding cap of 5% imposed by the regulator for all power generators in energy ex changes, non-energy investors are keen to invest in such entities.

According to rules, domestic com modity exchanges, stock exchanges depositories, banks, insurance com panies or public financial institutions can hold as much as 15% of the paid up capital of a commodity exchange.

Jignesh Shah-led Financial Technologies (India), one of the major shareholders of IEX, has been asked to divest up to 24.8% stake in the com pany after regulators declared it un fit to run an exchange following irregularities in operations that led to a` . 5,574-crore payment crisis at the National Spot Exchange Ltd, a group entity , in 2013.

“The current valuation will now be come the new benchmark for all future deals and the existing sharehol ders believe there is more value yet to be explored in the company ,“ said an other person involved in the deal.

With the nation’s power sector poised for expansion, IEX’s prospec ts and valuation are set to improve Many entities increasingly prefer to buy electricity on exchanges instead of entering into long-term purchase agreements with producers.

Source: The Economic Times


Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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