Eredene Capital PLC, a London-based AIM-listed investor in Indian infrastructure, has made a partial exit from a container freight station (CFS) with returns of 5.9x. Eredene Capital said in a statement that it had sold 10 per cent stake in Sattva CFS & Logistics Pvt Ltd for £1.1 million (Rs 8.6 crore or $1.72 million), fetching an IRR of 49 per cent. The stake was sold to the promoters of the Sattva Business Group and would bring Eredene’s stake down to 39 per cent. The deal is a debut exit for Eredene Capital.
Sattva CFS & Logistics is located near Chennai and provides services like bonded warehousing, secured and paved stacking areas, on-site assembly, computer-driven tracking systems and office facilities. Sprawled across 26 acres of land, the CFS handles containers from Chennai Port and has logged 60,000 TEUs (20 ft. equivalent units) in the year ended March 31, 2011, compared to 45,000 in 2010. Its key customers include South Korean machinery manufacturer Doosan, NYK Line, Maersk, CMA-CGM and MSC Shipping Company.
Sattva CFS was Eredene’s first investment in the sector in 2007. The business developed from greenfield site and has been consistently profitable and dividend-paying since 2009, according to Eredene.
The current deal implies a total valuation of Rs 85 crore (£10.9 million) for Sattva CFS, slightly below the directors’ valuation of Rs 91.8 crore (£12 million) as of September 30, 2011, but over five times the investment valuation of Rs 14 crore (£1.8 million). Eredene has made another CFS investment in Sattva Conware Pvt Ltd, also a Sattva Business Group company, operating near Ennore in Tamil Nadu.
“The partial stake sale in Sattva CFS is the first disposal since the Eredene Group began building a portfolio of infrastructure investments in India in 2007 and we are encouraged by the return on investment we have achieved,” said Alastair King, founder and CEO of Eredene.
Eredene Capital focuses primarily on ports, port services, logistics and transportation. It has made investments of £44.6 million or $70 million in 11 projects in India.
In 2010, a consortium including Eredene Capital, Spanish port operators Grup Marítim TCB SL, international construction group Obrascón Huarte Lain SA and India’s Lanco Infratech Ltd, won the bid to build and operate the £207 million (Rs 14,336 crore or $312 million) Container Terminal at Ennore Port in Tamil Nadu, one of the 13 major ports in one of the world’s fastest growing economies.