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December 7, 2017 VCCircle

How was Avigo Capital’s exit from cold chain solutions firm Rinac?

Mid-market private equity firm Avigo Capital Partners, which is now controlled by its limited partners (LPs) or investors in its funds, has exited its decade-old investment in a company with modest returns.

The promoters of cold chain solutions provider Rinac India Ltd have bought back the shares held by Avigo Capital. The deal, completed early this year, is estimated to be around Rs 46.5 crore ($7.2 million), a person familiar with the transaction told VCCircle.

Avigo is estimated to have clocked an internal rate of return (IRR) of under 6% in this transaction in rupee terms, and a negligible amount in dollar terms. Private equity and venture capital firms typically chase an IRR or annualised returns of 20-30% in local currency in emerging markets like India.

In 2007, Avigo Capital and one of its LPs, Metmin Investments Holdings, which is part of UK-based NRI business family Bagri, had picked a majority stake in Rinac for around Rs 37 crore (about $9 million). This involved a fresh issue of securities besides a chunk of shares bought from the promoters. Avigo, through the two entities, held around 43% stake while Metmin separately owned around 16%.

While Avigo has exited Rinac, Metmin continues to be a shareholder, the person familiar with the transaction cited above said.

The company’s founder PV Balasubramanium, backed by Piramal Finance, acquired the shares from Avigo Capital Partners.

Veda Corporate Advisors was the adviser to Rinac India for the transaction.

Separate email queries to Rinac, Avigo Capital and Piramal Finance did not elicit any response till the time of publishing this article. A spokesperson for Veda declined to comment.

Bangalore-based Rinac makes cold infrastructure facilities like cold rooms, cold warehouses, pre-cooler pack houses, banana ripening chambers, step-in chiller, display chiller, ammonia-based cooling equipment, insulated roofing, shelters and kiosks, according to its website.

It reported an operating income of Rs 210.4 crore for FY17 and a net profit of Rs 8 crore, according to a report by credit ratings agency ICRA. In the previous fiscal, it had posted net sales of Rs 181 crore and a net profit of Rs 6.7 crore, according to VCCEdge, the data research platform of VCCircle.

Avigo Capital has been liquidating its assets in India for a few years now. In 2013, it sold its stake in denim apparel maker Spykar Jeans to Metmin.

VCCircle reported in October 2015 that Siguler Guff, an LP of Avigo Capital Partners, had taken over the responsibility to oversee exits from the investment firm’s portfolio.

However, Avigo continues to hold stakes in several Indian firms. It is now known as Resurgent PE investments.