ICICI Venture, one of the leading venture capital and private equity funds in India, with $2 billion under management, is looking once again to script an exit from Chennai-headquartered facilities management company, Updater Services, one of the top three integrated facilities management companies in India.
ICICI Venture had invested close to Rs 100 crore for a 40 per cent stake in Updater Services during early 2008, and is understood to have now mandated Edelweiss to find a buyer for its stake. This is the second time around that ICICI Venture is hawking its stake, a year after it failed to script an exit. It is learnt that ICICI Venture is hoping for a 2x returns on its investment.
Updater Services has a topline of Rs 400 crore and operates at a 10 per cent Ebidta margin. It employs 30,000 people across 14 cities in India and offers a comprehensive and integrated facility management services for information technology, ITeS (information technology-enabled services), manufacturing and hospitality, among other industries.
T Raghu Nandana, managing director of Updater Services, confirmed that ICICI Ventures is looking at an exit. Though he has the first right of buying back the stake, he is not moving in that direction. Investment bankers add that there might be a Rs 400-450 crore consolidation move between Updater Services and another pan-India or a global corporation. Nandana has denied such a move.
It is learnt that Faering Capital, a private equity fund started by Aditya Parekh, looked at buying out ICICI Venture stake, but could not match the expectations of the exiting firm. “Faering Capital offered to buyout ICICI Venture at Rs 160 crore, but ICICI Venture is looking at Rs 200 crore,” an investment banker close to ICICI Venture told Business Standard. “So, that deal is not moving ahead. ICICI Venture will have to exit this investment within the next one year as the life of the fund is coming to an end.”
Most of the funds which have looked at buying out ICICI Venture have valued Updater Services at Rs 400 crore, but ICICI Venture is looking at an valuation of Rs 500 crore.
In addition to this move, tapping value in the largely unorganised segment of facilities management, 3i Group during late last year picked up a minority stake in Pune-headquarter BVG Group, giving an exit for Kotak Private Equity.
Global facilities management companies, including ISS and Compass, are understood to be quite active in India and looking for inorganic expansion.
Sodexo had acquired Radhakrishna Hospitality Services for around $100 million, while A2Z Infraservices had acquired CNCS Facility Solutions.