Peepul stays aggressive on investment strategy

This move by Peepul Capital comes at a time when Kurl-On is also understood to be in the market to raise Rs 200 crore through the private equity

Peepul Capital, the India-focussed private equity fund which manages $700 million of assets across three funds, is continuing its aggressive investment strategy despite many private equity funds going slow on investments in India.

Peepul Capital, co-founded by Srini Raju - earlier COO of Satyam Computers and one of the co-founders of Cognizant Technologies, is understood to be close to acquiring a significant stake in Bangalore-based fast emerging mattress company Peps Industries for Rs 200 crore.

While the management of Peepul Capital did not respond to requests for comment, Peps Industries said they are not raising external funds.

However, two independent industry players including a fund manager and an investment banker told Business Standard that the transaction is nearing closure, which may involve Peepul acquiring majority stake as well.

Peps Industries is among the three main players in the highly unorganised market, in which players like Bangalore-based Kurl-On and Springwell are creating differentiations to expand aggressively.

Started during 2005, Peps Industries has been focussing heavily on the spring mattress segment and has a long-standing strategic pact with US-based Restonic Corporation, the world's fourth largest inner spring mattress company.

Peps Industries has an expansive manufacturing unit at an 11-acre inner spring manufacturing unit in Coimbatore in Tamilnadu with two ancillary facilities in North and Western India and is understood to be clocking revenues of around Rs 125 crore.

This move by Peepul Capital to have a close look at Peps Industries comes at a time when Kurl-On is also understood to be in the market to raise Rs 200 crore through the private equity.

Peepul Capital, has made seven investments from its third fund including in Unibic Biscuits, Sresta Natural Bioproducts, Banjaras, Consul Consolidated, Cura and Motherhood Clinics. Peepul has completely exited portfolio companies from its first fund, while they have around 14 portfolio companies under its second fund.

Even as there is widespread pessimism across sectors, there was some cheer for PE investors during the first half of 2013.

The aggregate deal value of $4.72 billion for the first half of 2013 now compares itself favourably with the first half of 2012, thereby indicating a 15 per cent growth, according to data from PwC.

PE investors have been facing a slew of issues with the falling rupee and poor macro-economic environment within the country which has added to their worries.

"High levels of current and fiscal account deficits have been another serious concern for them, and while the Indian government has recently tried to relax the foreign direct investment norms in order to attract foreign capital, these measures are not expected to make any significant impact in the short term," said Sanjeev Krishan, Executive Director, Leader, Private Equity and Transaction Services at PwC India.

He added that consumer focussed sectors will continue to have investors' attention in terms of fresh investments while sharp valuations continue to challenge them and a cautious approach seems to be setting in.