Redington sells stake to Chrys Capital ahead of IPO

Regional distribution giant Redington has offloaded an 11.32% stake in the company to private equity find Chrys Capital for US$15m. The transaction, which values Redington’s overall operation at close to US$130m, has set a benchmark valuation ahead of Redington’s proposed IPO on the Indian stock market now pencilled in for June 2006.

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By  Stuart Wilson Published  March 27, 2006

Regional distribution giant Redington has offloaded an 11.32% stake in the company to private equity find Chrys Capital for US$15m. The transaction, which values Redington’s overall operation at close to US$130m, has set a benchmark valuation ahead of Redington’s proposed IPO on the Indian stock market now pencilled in for June 2006. Raj Shankar, director at Redington, said: “We are now actively seeking a stock market listing in India during the month of June. We do need to get approval from the Securities and Exchanges Board of India (SEBI) and also file a prospectus. However, we are hopeful that June is now a realistic time frame.” “Private equity companies always look at a pre-investment and post-investment valuation of a company. While this goes some way to setting a benchmark valuation, any private equity fund will be looking to realise an amount over and above their initial investment in the long-run,” he added. R. Srinivasan, managing director at Redington, stated: “By taking a stake in Redington, Chrys Capital has got an exposure not only to the booming Indian market, but also to the high growth Middle East markets. Over 40% of Redington’s revenues are from overseas markets.” The investment from Chrys Capital also puts a stamp of approval on the quality of Redington’s operations in the run-up to its proposed IPO. Investors in Chrys Capital include Harvard Management, HSBC, Singapore Economic Development Board, Stanford University and the Government of Kuwait. Brahmal Vasudevan, managing director at Chrys Capital, said: “Increasingly, private equity investments are moving from IT, ITES and pharma companies to other sectors. We view the supply chain sector in large countries like India and difficult logistical countries like Egypt and Jordan and also in Africa to constitute a great investment opportunity. We are happy to have had the opportunity to invest in Redington.” Redington also sold a 34% stake of the company to Taiwanese distribution giant Synnex in 2005. With Redington’s financial year closing at the end of March, Shankar confirmed that the distributor has now surpassed sales of US$450m in the Middle East and Africa region for fiscal 2005-2006.

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