In one of the rare secondary transactions in the Indian private equity landscape, Swiss Re Private Equity Partners is buying the interest of London-listed EIH Plc. in the Evolvence India Life Sciences Fund. The deal involves an entity of Swiss Re paying $5 million for the commitment made by EIH Plc. and assuming the obligation of future calls (on the commitment) by Evolvence India Life Sciences Fund, according to a disclosure.
Swiss Re Private Equity Partners AG manages investments in excess of $7.5 billion.
Private equity secondary market refers to the buying and selling of pre-existing investor (limited partners) commitments to private equity and other alternative investment funds. While the global secondary has picked up significantly post-2008 financial crisis, there have been only a few such deals in India.
EIH Plc., an AIM-listed private equity fund focused on India, had committed $6 million, out of which $2.133 million remains uncalled. EIH had valued its committed capital at $5.95 million as of December, 2010, but the current deal with Swiss Re values this at 16.2 per cent discount. EIH has still made a gain of 29 per cent on its investment. EIH will distribute these proceeds to its shareholders and has declared a capital distribution.
An e-mail query sent to Hari Buggana, managing director of Evolvence India Life Sciences Fund, did not elicit a response at the time of publishing this article.
After this transaction, EIH’s outstanding capital calls stand at $6.1 million for the Evolvence India Fund, a fund of funds managed by Dubai-based alternative investment firm Evolvence Capital. Evolvence India Fund had raised $250 million and backed Indian funds like Baring India, India Value Fund, New York Life Investment Management India Fund and IDFC Private Equity.
EIH Plc., which was promoted by Evolvence Capital, had raised $65 million in its listing in 2007. EIH invested $45 million in Evolvence India Fund (and Evolvence India Life Sciences Fund) while the rest was directly invested in generic drug-maker Gland Pharma and auto component firm RBS Group.
Evolvence India Life Sciences Fund, a $90-$100 million fund focused on investing in the life sciences space in India, has made five disclosed investments. Its last-known deal was in December, 2010, when it picked up 21.05 per cent stake in Fermenta Biotech Ltd for Rs 40 crore. Thane-based Fermenta is focused on biotechnology, pharmaceuticals and environmental solutions.
Before that, Evolvence India Life Sciences Fund invested Rs 35 crore in Sutures India Pvt Ltd, makers of surgical consumables. It also made an investment of Rs 25 crore in Chennai-based Anjan Drugs, one of the largest US-FDA-approved manufacturers of drugs for epilepsy. Its other two deals are in advanced drug delivery mechanism company Gland Pharma and cancer services network Health Care Global.
Limited partners (LPs), especially FOFs (fund of funds), have been bullish on secondaries in the relatively young Indian private equity market, but there have been only a few reported transactions. According to secondary specialist Triago, 2010 was the biggest year for secondary transactions, with deals worth $20 billion, more than two-and-a-half times of the previous year’s $7.5 billion, and 33 per cent higher than the 2008 record of $15 billion.
In early June, Citigroup sold $1.7 billion private equity portfolio to France’s Axa Private Equity in one of the largest secondary deals.
Coller Capital, one of the largest private equity secondaries firm, has bought secondary stakes in funds of ICIC Venture, IL&FS Investment Managers and UTI Ventures (now Ascent Capital) during 2006-2007.
Jason Sambanju, Asia co-head of secondary-focused Paul Capital, has recently told VCCircle that the firm has committed $50 million in India and is looking at a few transactions in the country.
See our earlier report
"Secondary Market For PE Evolving Fast In India"