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Fairwinds PE looks to exit four portfolio firms before year-end

LiveMint logoLiveMint 12-09-2017 Swaraj Singh Dhanjal

Mumbai: Fairwinds Private Equity (PE), which has been focusing on exiting several of its portfolio companies, expects to return around two times the capital that it raised from limited partners (LPs) by the end of the year, said a senior executive of the firm.

Fairwinds was earlier known as Reliance Equity Advisors, which was the PE arm of Anil Ambani’s Reliance ADAG group . In 2013, the firm was re-branded as Fairwinds Private Equity after a management buyout led by the firm’s chief executive Ramesh Venkat. The firm had raised a $210 million (under Rs1,000 crore) private equity fund in 2010.

“We have had three exits so far out of a total of eight investments. With these three exits we have returned 80% of the fund back to investors,” said Venkat, founder and managing partner at Fairwinds.

The three portfolio companies that Fairwinds has exited include education services provider Sarla Holdings Pvt. Ltd (which owns and operates Pathways schools), home improvement and building products retailer Shankara Building Products Ltd and consumer durables contract manufacturer Amber Enterprises Ltd.

The PE firm exited Shankara Building Products through a successful initial public offering (IPO).

“We ended up at around 5x the price at which we made the investment. We had a 35% stake in Shankara; we sold most of it in the IPO and the rest after six weeks at a much higher price compared to what we got in the IPO,” said Venkat.

In Amber, Fairwinds sold its stake to another PE investor, while its exit in Sarla came through a buyback of shares by the promoters at a market-discovered price.

While Shankara resulted in a 5x return multiple for Fairwinds, the other two exits saw the firm achieve around 2x of the capital invested.

The next exit in the pipeline for Fairwinds is footwear retailer Khadim India Ltd, which recently filed its draft IPO papers. The IPO is expected to hit the markets sometime in the next few weeks.

“We expect Khadim’s to be very well received. Today, the company is the second-largest footwear retailer after Bata and has tremendous potential for growth in both footwear retail and distribution, given the target market it operates in,” said Venkat.

The firm had invested around Rs400 crore across these investments.

Exits from valves manufacturer Dembla, speciality chemicals maker VVF Ltd and kitchen appliances maker Butterfly Gandhimathi Appliances Ltd are also in the works.

“All these three exit processes are on and we should hopefully close before end of the year. Two of them could be to strategic buyers,” said Venkat.

The fund is targeting a 2x return to investors with all these exits, he added.

Concurrently, the firm is also working on raising a second, and larger fund. Fairwinds is targeting $400-500 million. The firm already has some preliminary commitments from LPs.

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