TVS Capital buys 3% stake in IEX from Bessemer Venture for Rs 75 crore
When contacted, Vishal Gupta, managing director, Bessemer Venture Partners India, confirmed the sale of stake in IEX to TVS Capital.
TVS Capital, that was part of the consortium with Multiples to purchase 24% stake in India’s largest electricity exchange by volume, went ahead and bought the stake from Bessemer Venture Partners which had invested in the company in 2010. The company was valued at Rs 350 crore at that time.
“Bessemer has made around seven times returns on its investments in IEX,” one of the persons involved said. Bessemer, along with Lightspeed Venture Partners, had acquired stake from PTC Financial Services for Rs 70 crore. Bessemer continues to hold around 6% in the company.
When contacted, Vishal Gupta, managing director, Bessemer Venture Partners India, confirmed the sale of stake in IEX to TVS Capital. Gupta will continue to be a director on the board of IEX even post the transaction. Some of the other investors in the company include Aditya Birla PE, Multiples Private Equity Fund, Adani Enterprises, Jindal Power, Lanco Infra, Reliance Infra, Rural Electrification Corporation, Tata Power and lender IDFC. PTC continues to hold around 5% stake in the company. Former Aditya Birla PE chief executive Bharat Banka acted as the sole advisor to the deal. After quitting Aditya Birla PE, Banka is advising various business houses, funds and startups.
With a shareholding cap of 5% imposed by the regulator for all power generators in energy exchanges, non-energy investors are keen to invest in such entities. According to rules, domestic commodity exchanges, stock exchanges, depositories, banks, insurance companies or public financial institutions can hold as much as 15% of the paidup capital of a commodity exchange.
Jignesh Shah-led Financial Technologies (India), one of the major shareholders of IEX, has been asked to divest up to 24.8% stake in the company after regulators declared it unfit to run an exchange following irregularities in operations that led to a Rs 5,574-crore payment crisis at the National Spot Exchange Ltd, a group entity, in 2013.
“The current valuation will now become the new benchmark for all future deals and the existing shareholders believe there is more value yet to be explored in the company,” said another person involved in the deal.
With the nation’s power sector poised for expansion, IEX’s prospects and valuation are set to improve. Many entities increasingly prefer to buy electricity on exchanges instead of entering into long-term purchase agreements with producers.