ICICI Venture has picked up New Vernon Bharat's 40% stake in Chennai-based Updater Services (UDS), India's largest integrated facility management company, for close to Rs 100 crore.
Founded in 1985, UDS manages over 50 million sq ft of space across all segments including corporate, IT parks, industrial and retail. It also offers production support services for auto major Hyundai Motor India and French glass major Saint Gobain.
TUDS, which closed 2006-07 with a top line of Rs 82 crore, expects to achieve Rs 120 crore for the current fiscal. A couple of other funds including Actis and Future Capital were also in the race to pick up New Vernon's stake in UDS. Veda Corporate Advisors facilitated the deal. Earlier, US-based venture fund, New Vernon Bharat, had picked up a minority stake in UDS in January, 2006 by pumping in $10 million.
While UDS has been valued at Rs 200 crore - Rs 220 crore for the deal based on last year's turnover, New Vernon has more than doubled its investment in just two years. Currently, the organised facility management service in India is estimated around Rs 600 crore per annum and growing at 40-50% year-on-year.
"The booming Indian economy has created huge demand for office space, from both IT and non-IT sectors including retail, besides attracting large scale investments in the manufacturing sector. Being India's largest integrated facility management company, we will continue to be in the forefront and grow aggressively, through both organic and inorganic routes," UDS managing director T Raghunandana told ET.
According to him, UDS stands to gain by associating with ICICI, which has a large presence across regions, through its investments in real estate. Captively as a group, ICICI has large properties under its operations and spends an estimated Rs 40 crore per annum on facility management.
"They are not only aggressively growing, but also investing heavily in properties. ICICI plans to add 15 million sq ft of space to its kitty over the next 24 months," Mr Raghunandana said. While UDS has been achieving 40% year-on-year growth over the last few years, with ICICI on its side, it hopes to increase this to 60% from now on. â€œDespite a pan-India presence, UDS is still a predominantly south-based company.
Almost 75% of its revenues come from the region , though we moved to other regions over three years ago. ICICI's major strength is its strong presence in the west and northern regions," says UDS Business Development head Samitha Rao. UDS expects its revenues to touch Rs 200 crore by March 2009.