Xpro India Ltd has entered into a securities subscription agreement with Malabar India Fund limited, a hedge fund run by New York-based former McKinsey & Co. executive Sumeet Nagar, to pick up minority stake in the firm, according to a stock exchange filing.
On Tuesday, Xpro India, which is a Birla group company with diversified commitment to the polymer processing industry, agreed to issue 1.64 million convertible warrants at Rs 762 apiece to Malabar India Fund, a hedge fund run by New York-based Sumeet Nagar, for gross proceeds of Rs 125 crore ($16.8 million).
Each warrant will be convertible into one equity share of the face value of Rs 10 apiece within eighteen months from the date of allotment.
The conversion shares will represent 12.2% stake in the company, as per VCCircle estimates. The investor reserves a right to appoint a non-executive, non-independent representative director on the board as long as it holds over 10% stake in the company, Xpro India said in the filing.
Established as a separate entity as recently in 1998, the Kolkata-based company has been on the investor radar and in the headlines due to its exceptional returns generated by the company's stock on the bourses during 2021.
Xpro India's shares have garnered investment returns of over 27 times. The share price grew from Rs 36 apiece to over Rs 900 a piece within one year.
In fact, the company’s share hit an upper circuit of 5% during the early hours of trading on Wednesday. The company’s shares are valued at Rs 977.9 apiece on BSE.
Malabar Investments, which runs Malabar India Fund, was set up in 2008 and has offices in New York and Mumbai. According to its website, it identifies small to mid-sized companies that are leaders in their niche and have a long runway of profitable growth.
In December, VCCircle reported that Malabar Investments bought into Burger King India Ltd’s initial public offering (IPO) by picking up shares from private equity firm Everstone Capital.
Last year, Malabar India Fund also invested in the pre-IPO round of travel and hotel booking service provider ixigo and speciality chemicals maker Rossari Biotech Ltd and also picked up a minority stake in Neogen Chemicals Ltd, another player in the speciality chemicals segment.
The Nagar-owned fund has also made investments in HLE Glascoat Ltd, which designs and makes carbon steel glass-lined equipment and acted as an anchor investor in the IPO of software services company Happiest Minds Technologies Ltd.