India's IDFC completes part-exit via Parag Milk Foods IPO

The firm offered 8.3 million shares for sale in the IPO, a 10% stake; IDFC will continue to hold a 7% stake after the sale. Parag had hoped to raise INR3.3 billion in the IPO; after the offering was oversubscribed and extended by three days, it closed at INR7.6 billion. The stock opened at INR217.50 on its market debut, up from the offer price of INR215. It closed at INR247.80.

IDFC Private Equity (IDFC PE) has generated a cash multiple of 2x and an IRR of 21% on an investment of INR1.6 billion in 2013. The investment also represented a partial exit for Motilal Oswal Private Equity (MOPE), which committed $14.1 million to the company in 2008. MOPE also made a partial exit in Parag's IPO; the firm sold 5.6 million shares, giving it a return of around INR1.2 billion.

Parag was founded in 1992 and produces a range of dairy products, including milk and milk powder, cheese, clarified butter and yogurt. The company reported INR14.4 billion in revenue for the year ended March 2015, up from INR10.9 billion the previous year. Over the same period profit grew from INR146 million to INR295 million.

This represents the fifth exit for IDFC PE in the last year. The firm also sold controlling stakes in Green Infra and Viom Networks to strategic buyers Sembcorp Utilities and American Tower Corporation respectively; made a full exit from Maharashtra Natural Gas Limited to Indraprastha Gas, and divested a partial stake in StarAgri to Temasek Holdings. Since its founding IDFC PE has realized over $850 million from 27 exits.

IDFC PE made its investment in Parag out of its third fund, which launched in 2007 and closed in 2008 at $700 million. In a statement the GP said its next fund, like the third, will focus on investments in consumer-focused businesses, along with the food and agriculture, healthcare, education, technology, media and telecom, and entertainment sectors.

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• Topics
• South Asia
• Consumer
• IPO
• GPs
• India
• IDFC Private Equity