Private equity firm Warburg Pincus has increased its holding by 3.06% in electrical equipment company Havells India Ltd through open market bulk deals. SAIF Partners (Softbank Asia Infrastructure Fund), another private equity fund, has also increased its stake to 3.43% in the firm through open market deals. Warburg Pincus already has 7.18% stake in Havells, which it acquired through a fresh issue of shares by the company last year. Its overall stake is 10.25%.
Warburg Pincus had entered into a deal with Havells to pick up an 11.2% stake for $110 million in October last year. The deal involved an issue of 41,60,000 equity shares at a price of Rs 625 each and 26,00,000 warrants convertible into shares at Rs 690 each. The deal struck at the peak of the markets now seems to be hitting the private equity giant.
The market situation and global economic outlook has changed a lot since the deal was struck last year in October. The shares of Havells are now trading below even Rs 200, and Warburg has already lost more than a third of its investments. By buying stakes from open market, Warburg now wants to bring down its average purchase price.
Warburg has picked up 3.06% stake in two bulk deals for an aggregate sum of around Rs 55 crore. The shares have been picked up in June this year at Rs 370 per share and in October for Rs 233 per share.
SAIF Partners has also built up 3.43% stake through various open market deals. The most recent was on 27 October when it bought 495,000 shares from the open market at a low price of Rs 160. It also picked some shares in July for more than double this price at Rs 360. The rest of the stake has been picked up through block deals.
It seems that SAIF Partners is being opportunistic, and rather than going for pure private equity deals its investing in listed companies, whose valuations have dipped. Some of SAIF Partners investments in India are IL&FS Investmart, Home Shop18, Just Dial and National Stock Exchange.
