India Value Fund Advisors buys NBHC for $39m
India Value Fund Advisors (IVFA) has agreed to buy commodities and collateral management business National Bulk Handling Corporation (NBHC) from Financial Technologies India (FTIL) for INR2.42 billion ($39.5 million).
The divestment is part of a broader restructuring plan introduced by FTIL, a financial markets services provider active in Asia, Africa and the Middle East. The company, which counts The Blackstone Group and CVCI among its investors, is also in the process of selling a 24% stake in the Commodity Exchange of India (MCX).
According to a regulatory filing, FTIL and all other shareholders in NBHC will transfer 100% equity ownership of the business to a subsidiary of India Value Fund IV, a 2009 vintage vehicle that raised approximately $700 million. The corpus was trimmed by 15% in 2012 due to changes in the investment environment.
This is IVFA's second buyout in the space of two months. At the end of January the PE firm teamed up with the founder of Hicare to acquire the pest control business from Danish multinational ISS Global in a deal worth INR2.5 billion, including primary growth capital.
NBHC is an integrated commodities and collateral manager, providing services ranging from bulk handling to commodities valuation. It has 569 warehouses and cold storage facilities nationwide with a handling capacity of 1.47 million metric tons as well as network of 41 partner banks. The deal values NBHC at 6x EBITDA based on one-year-old earnings, VCCircle reported.
The move to divest MCX comes after the Forwards Market Commission (FMC), India's commodity markets regulator, said that FTIL was unfit to hold more than 2% of MCX. FMC holds the company and its directors responsible for a INR55 billion fraud involving its unit in National Spot Exchange (NSEL).
Blackstone bought a 2% stake in MCX in March 2013 and it emerged last December that the private equity firm would increase its holding to 4.99%, making it the largest non-promoter shareholder.
FTIL's business covers three verticals: technology solutions for exchanges, brokerages and consulting; the exchanges themselves, with stakes in bourses in Singapore, Mauritius, Botswana, Bahrain and Dubai, in addition to MCX and NSEL; and ecosystems, covering payments processing, information broadcasting and knowledge training, as well as commodity and collateral management.
The company reported consolidated net profits of INR1.27 billion for the year ended March 2013, down from INR1.63 billion for the previous 12-month period. EBITDA rose from INR3.24 billion to INR3.99 billion.
IVFA's acquisition of NBHC, which still requires shareholder approval, is expected to close in the second half of April.
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