Blackstone Plans Sonalika Stake Sale
Ropes in four investment banks to help tractor co with .₹ 2,000-cr IPO; PE firm plans to sell half of its holding in the offer
Indulal PM & Ketan Thakkar
Mumbai: After investing $1.1 billion in IT services firm Mphasis a fortnight back, Blackstone, the world’s biggest private equity fund, is gearing up for a multi-bagger exit by selling shares in one of its portfolio companies.
Sonalika International Tractors Ltd (STIL), backed by the New Yorkheadquartered investment firm, is looking to raise as much as .₹ 2,000 crore through an Initial Public Offering (IPO). Blackstone has roped in four investment banks, including Goldman Sachs Inc, to help them with the listing, multiple sources with direct knowledge of the matter told ET.
SITL, the third-largest tractor maker in India and which sells under the Sonalika brand, has also hired Kotak Securities, JM Financial and ICICI Securities as book running lead managers for the issue.
The public offer, expected to be among the biggest this fiscal, is lik- ely to launch in the second half of this year, sources said. The issue will see all major shareholders dilute their equity partially to offer up to 20% to new investors, at a .₹ 10,000 crore valuation.
Blackstone had invested about $100 million for a 12.5% stake in SITL in 2012, and increased it to 17.5% later, while Yanmar Asia, a Japan-based agriculture equipment maker, has picked up another 12.5% in the company. The founders, led by chairman Lachhman Das Mittal, own the residual 70%.
The largest chunk that will be made available in the IPO will come as an offer for sale from Blackstone, which is expected to make a partial exit of nearly half of its holding. Yanmar and the company’s promoter group are yet to decide on the ex- act quantum of stake dilution, said one of the sources mentioned above. The private equity fund is likely to treble its return from a four-year old investment. When contacted, Blackstone, Goldman Sachs and ICICI Securities declined to comment. Kotak and JM Financial did not immediately return an email seeking comment till press time.
AS Mittal, vice-chairman of Sonalika Group of Companies, told ET that the listing proposal is being considered but it is too premature to comment on.
“Broadly speaking, the company is sitting on cash reserves of close to .₹ 1,800 crore and there’s no need to raise funds right now. Blackstone is a private equity investor: they invest, create value, earn returns and exit. That is their nature of business. To provide them an exit, the board may discuss an IPO route,” said Mittal.
If successful, Blackstone will make its second exit in a span of six months after it sold part of its holding through the IPO of specialty
Blackstone had invested about $100 million for a 12.5% stake in SITL in 2012, and increased it to 17.5% later
chemicals maker SH Kelkar. Since 2005, it has invested over $5.1 billion in India across its private equity and real estate practice.
Sonalika Tractors, founded by Mittal when he was 65 after retiring as a zonal manager of state-run LIC, has been the fastest growing brand in the tractor space in the country and has seen over 400 bps increase in market share over the past three years to the current 12%.