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July 19, 2012 VC Circle

Oman India Joint Investment Fund acquires minority stake in Indus Teqsite

Formed by the State General Reserve Fund of Oman and SBI of India, the fund currently has a $100 million corpus and a sector-agnostic mandate. Indus Teqsite Pvt Ltd.

Oman India Joint Investment Fund, the private equity fund sponsored by Oman’s sovereign wealth fund and India’s largest lender State Bank of India, is acquiring a minority stake in Indus Teqsite Pvt Ltd.

The fund, which was set up two years ago, has picked up nearly 20 per cent stake for $9.8 million (approx. Rs 55 crore) in the Chennai-based company, according to a source familiar with the development. Although it could not be independently confirmed, the deal is most likely the debut investment by the fund.

Indus Teqsite is involved in development and production of mission-critical products and instrumentation for the defence and aerospace industries. The deal would value the 15-year-old company at Rs 275 crore or $49 million.

This is not the first brush of the company with private equity as its subsidiary Data Patterns India had raised funding from SIDBI Venture Capital and SICOM Capital back in 2004.

When contacted by VCCircle, Srinath Srinivasan, chief investment officer at Oman India Joint Investment Fund, declined to comment on the development. An e-mail query sent and calls made to Indus Teqsite did not elicit any response till the time of posting this article.

Oman India Joint Investment Fund, formed by the State General Reserve Fund (SGRF) of Oman and SBI, currently has a $100 million corpus, equally contributed by the two parties. Its management company is owned 50:50 by SBI and SGRF, and it has a sector-agnostic mandate. At the time of its launch, it was said that the corpus of the fund could be increased up to $1.5 billion through future schemes.

Indus Teqsite was set up by technocrat and first-generation entrepreneur S. Rangarajan in 1998. It designs, develops and manufactures electronic hardware, and also develops complementary software applications for electronic systems and subsystems used by the defence and aerospace industries. The company operates a 100,000 sq. ft. production facility at the Siruseri Information Technology Park in Tamil Nadu. Some of the key clients of Indus Teqsite include Defence Research and Development Organisation (DRDO) and Hindustan Aeronautics Ltd.

Credit rating agency CRISIL upgraded the outlook of Indus Teqsite from negative to stable in August last year. “The outlook revision reflects expected steady growth in the Indus group’s revenues while the group maintains its margins at the current levels, on the strength of its sizeable order book and demonstrated execution capabilities,” the agency stated.

Indus Teqsite reported 51 per cent increase in net sales to Rs 42.2 crore in FY11 with profit after tax jumping over seven times to Rs 4.42 crore in the same period. However, the recent numbers could not be immediately ascertained.

“The outlook revision also reflects the group’s ability to maintain improvement in its liquidity, supported by increase in its customers advances toward repeat orders for certain products, which were earlier in the development stage but are now being commercially produced,” the CRISIL note added.