 "Everstone gets hungry for more buyouts after Modern Foods deal")
When Everstone acquired Modern Foods from Hindustan Unilever late last year, it was only the beginning of accelerated buyout deals for one of the largest India-focused funds. The private equity (PE) firm, which wasted no time in appointing a new management for the business and set a target to increase annual revenue four-fold to Rs 1,000 crore in the next few years, is scouting for more such investment opportunities.
The firm, founded by Goldman Sachs veteran Sameer Sain, raised its third and largest fund with a $730 million corpus in September to tap emerging opportunities for such buyouts and transactions, where it can acquire control and invest for further growth. It has now made another such investment in a life sciences company. The firm did not disclose further details.
"We have buyout opportunities that are financially stressed but operationally good. Such opportunities are sitting embedded across large groups. We would like to acquire them," said Dhanpal Jhaveri, managing partner of Everstone Capital.
Last month, Everstone also hired Avnish Mehra as managing director to target such investment opportunities. Mehra was earlier senior director at Advent International, a global private equity firm investing in buyouts, recapitalisations and growth equity transactions.
He would not only look at stressed assets but for non-core businesses inside large companies and which can be bought out.
It is not that Everstone is having control transactions for the first time. Last year, Everstone bought control into domestic auto component maker SJS Enterprises and acquired the salary processing business of Aon Hewitt in Asia-Pacific. But, it is only that it sees more opportunity for such deals. In the past decade of its investment, it always targeted a third of its deals, which it defines as platform investment, on early-stage companies that require incubation. Another one-third were controlled transaction deals. The rest were minority deals. It is now expecting a larger share of controlled transaction from what it called platform investments (because it uses PE firm's platform for supporting incubation).
"The opportunity to do control transactions is far more today than five years back. The size of the economy has grown and promoters are fast realising the need for different skills sets to take their businesses to the next level now," said Jhaveri, managing partner, Everstone Capital. "Many of them today want to hand it over to someone else instead of continuing and destroying the value." According to data from VCCEdge, 2015 saw the highest ever $3.7-billion buyout deals by private equity across 27 transactions. This year, the first four months have already seen $1.7 billion worth of buy-out deals across 11 transactions.
CLARIFICATION
In an earlier version of this article, Advent International was wrongly described as a US buyout firm, focused on stressed assets and that Avnish Mehra was its former country head in India. Advent International has clarified that Mehra was a senior director with the firm and that it is a global private equity firm investing in buyouts, recapitalisations and growth equity transactions. It does not focus on stressed assets. The errors are regretted.