Blackstone sells 10% stake in Gokaldas Exports at huge loss

By TEAM VCC

  • 10 Jun 2016
Blackstone sells

Private equity giant Blackstone has sold just under 10% stake in garment exporter Gokaldas Exports Ltd or one-sixth of its total holding in the firm as it looks to gradually liquidate one of its loss-making investments in India.

The PE firm sold shares at Rs 126.2 each or less than half the price at which it had invested in the firm.

It pocketed Rs 43.5 crore ($6.5 million). Exchange data show ICICI Bank bought the shares.

Blackstone had previously part exited from Gokaldas Exports two years ago. It had initially sold 5.6% stake out of its 68.2% holding in June 2014 for Rs 16.19 crore. At that time, it had sold shares for Rs 83.9 a piece. Later that year, it sold another 4.5% stake for Rs 10.48 crore at Rs 67.65 each.

That time too, the shares were acquired by ICICI Bank, as per bulk deal disclosure on the BSE.

The latest transaction marks the third part-exit for the PE giant from one of its private investment in public enterprise (PIPE) deals in the country.

Blackstone had invested in the company in 2007, just months before the stock market tanked, at Rs 275 a share.

It had bought a majority stake in the company for Rs 485.2 crore and later hiked its holding through an open offer.

Blackstone's remaining 47.5% stake is currently worth Rs 212 crore.

Gokaldas Exports' scrip rose 0.67% to close the day at Rs 128.05 a share on the BSE in a weak Mumbai market on Monday.

The company was affected by the global slowdown as it was dependent on its exports business to the developed markets.

The firm's revenues remained almost flat at around Rs 1,100 crore in the last eight years with a small dip in between. It moved from net profit of Rs 47.8 crore in the year ended March 31, 2008 to net loss of Rs 132 crore in 2011-12. It came out of the red in 2014-15 after five straight years of loss.

For the year ended March 31, 2016, it clocked net sales of Rs 1,142.9 crore with a net profit of Rs 61.3 crore.

The firm almost halved its net debt last year and sought to consolidate its manufacturing operations besides implementing other cost cutting measures. It expects weak international demand to remain a challenge for the business.

For Blackstone that struck a bulge bracket deal early this year with an agreement to acquire up to 60.48% of Bangalore-headquartered IT services firm Mphasis Ltd from Hewlett Packard Enterprise for Rs 5,466 crore, this is the first exit activity in 2016.

Last year, it sold its majority stake in CMS to Baring Private Equity Asia. Last year, it also part exited in the IPO of flavours and fragrance maker SH Kelkar & Co Pvt Ltd. Early last year, it had also sold stake in auto parts firm Agile Electric. All these were profitable exits for the PE firm.

While Blackstone had made some good investments in the private space, it had bet on some public listed firms such as Gokaldas Exports at the wrong time when stock market valuations were peaking out in India.

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