Goldman, ICICI Venture plan to exit investment portfolios

Written by Reghu Balakrishnan | Updated: Apr 17 2009, 05:23am hrs
With the uncertainty in the private equity sector due to the diminishing valuations and the exit time fast approaching, major players are seeking to quit some of their investment portfolio. Goldman Sachs (GS) plans to exit from IRB Infrastructure Developers, where it had acquired a minority stake, while ICICI Venture may exit from the investment in VA Tech India, sources in the know said.

VA Tech India, a Chennai-based firm focused on water management, was a subsidiary of Austrian firm, VA Tech Wabag GmbH. In 2005, ICICI Venture took a majority stake in the Indian arm and in 2007, VA Tech India had reportedly acquired the parent company from Siemens for about $100 million. Rajeev Bakshi, joining managing director, ICICI Venture said, We are looking at opportunities to exit from a few of our investment portfolios. However, I cannot comment on any specific investments. In 2007, GS along with Deutsche Bank and Merrill Lynch had picked up around 12% in IRB for around $60 million. IRB operates a number of BOT (build, operate and transfer) projects. Last week, Deutsche Bank AG sold 10 million shares of IRB at the NSE. When contacted, Edward Naylor, director, corporate communications, Goldman Sachs Asia, said, It would be incorrect to assume we are planning any exits at present though we will not comment specifically.

Bhavesh Shah, director, investment banking, JM Financial said, Due to the mounting carrying cost or the additional cost accompanying with the investments, investors want to exit from smaller investments, where there are not enough returns for them. In February, FE had reported Goldman Sachs plans to exit from its investment in Punjab-based food major, Cremica, in which GS had acquired 10% stake in 2006. GS is also supposed to dilute its stake by 2% from its current stake of 7% in the National Commodity and Derivatives Exchange (NCDEX) by June 30 this year to meet the foreign investment requirements. According to Arun Natarajan, CEO of Venture Intelligence, buyers could be either strategic investors or PE players who are sitting on a huge cash pile, in the case of unlisted companies.

He said, A few partners who have raised money can easily buy better portfolio investments at cheaper rates. For the funds nearing their life time, replacing the current investor with a new one is the most acceptable option at this situation as far as the exit for unlisted companies is concerned.