ICICI Venture makes 4x returns from sale in India(2)

ICICI Venture is poised to make a 4.25 times cash return from a divestment in Ace Refractories, an investment made less than two years ago from its maiden fund.

ICICI Venture, one of India’s most prominent private equity groups, has entered into an agreement to sell its interest in Ace Refractories, an investment made in October 2005, to a strategic buyer for an enterprise value of 5.5 billion Indian rupees ($134 million; €100 million).

The sale, scheduled for completion at the end of August, of the monolithic refractories producer to Paris-listed industrial minerals firm Imerys is expected to return ICICI Venture 4.25 times cash on an investment made less than two years ago, according to a source close to the deal.

In October 2005, ICICI Ventures invested 2.5 billion Indian rupees – 1 billion rupees in equity – into what was then a refractory business unit of India’s Associated Cement Companies, the country’s largest cement maker.

The sale of Ace arose after ICICI was approached by a number of potential buyers – strategic as well as financial sponsors – one of whom made an offer even before ICICI Venture’s bankers officially launched the sale process,  the source said.

The investment in Ace Refractories was made from ICICI Ventures’ India Advantage Fund Series I, a $240 million fund raised in 2003. The fund is expected to be 75 percent divested by the end of 2007.

ICICI Venture is investing from India Advantage Fund Series 2, an $810 million investment vehicle that is half invested. Earlier this year, ICICI launched an India-focused mezzanine fund with a $100 million target. The firm expects to raise a separate and third India-focused private equity fund next year, with a target of $2 billion.