New Delhi, May 1 -- Private equity firm GEF Capital Partners, which spun out of US-based Global Environment Fund five years ago and kickstarted the process to raise a new India-focussed clean energy fund with a larger mandate, has set the ball rolling for another exit after signing off from one portfolio company last year.
The PE firm is looking to offload a little over a quarter of its stake in Premier Energies, a solar cell and solar module manufacturer, via its proposed initial public offering (IPO).
Premier Energies is looking to raise as much as Rs 1,500 crore besides an offer for sale, by GEF Capital and the promoter.
GEF Capital had invested Rs 177 crore via debentures and shares in September 2021. It owns around 21% stake in the company. This means it had valued the firm at around Rs 847 crore.
A source said the company is eyeing a valuation multiple of 12x EBITDA, translating into a post-issue market cap of around Rs 4,800-5,000 crore, given its earning profile in the first nine months of FY24.
In effect on a pre-money basis, the company would be looking at a valuation of around Rs 3,300-3,500 crore.
GEF Capital would be sitting on around 4x multiple of invested capital (MOIC) in the IPO within three years translating into annualised returns of around 60%, as per VCCircle estimates.
This would be in-line with the company scaling up during the same period. Between FY21 and FY24, its topline has risen 4x while net profit has likely grown even faster.
Websol, a peer group of Premier Energies, currently commands a market cap of Rs 2,800 crore with negligible revenue. Its solar cell production line has become operational in February.
Premier Energies says it is India's second largest integrated solar cell and solar module manufacturer with an annual installed capacity of 2 GW and 3.36 GW, respectively, as of 31 March, 2024.
Its business operations include the manufacturing of solar photovoltaic (PV) cells, manufacturing of solar modules including custom made panels for specific applications, execution of EPC projects, independent power production, O&M services with respect to EPC projects executed by it and sale of other solar-related products.
It has five manufacturing facilities, all of which are situated on land it owns in Hyderabad.
GEF Funds
GEF hit the final close of its second fund at $200 million in March 2021. This fund focusses on making equity investments in small and medium-sized enterprises (SMEs) that actively promote climate action and environmental sustainability.
The South Asia Growth Fund II succeeded the South Asia Clean Energy Fund, which had its final close in 2010 with $128 million. GEF had partnered with Yes Bank, an Indian private-sector lender, for its initial South Asia vehicle.
GEF Capital aims to raise as much as $400 million under SAGF III and had already got commitment of more than half of the total.
The alternative investment firm, based in South Asia and led by founding and managing partner Raj Pai, last year signed off from Chennai-based electronics manufacturing services company, Syrma SGS Technology, with strong return multiples.
The investor has harvested around Rs 238 crore ($28.7 million) by selling its remaining 3% stake in the company after previously pulling out about Rs 187 crore (around $23 million) from the stake sale on the secondary market. GEF had invested Rs 75 crore in Syrma SGS Technology in 2020. It stayed put when the company went public two years ago.
GEF had generated a 5.7x MOIC and an internal rate of return (IRR) of around 80%, as per VCCircle estimates. This is way above the 20-30% annualised return that PE firms chase in rupee terms at fund level. Syrma is an engineering and design company focussed on technology, specialising in offering turnkey EMS.
Published by HT Digital Content Services with permission from VC Circle.