New Delhi, April 30 -- Arpwood Partners, a private equity investment firm floated by former Carlyle India head Rajeev Gupta, Raj Kataria and Amol Jain, has scored a rich harvest from a seven-year-old portfolio company, it is learnt.

The Mumbai-based PE firm, which has backed companies including SBI Cards, Vishal Mega Mart, Sterling Hospitals and Suryoday Small Finance Bank among others, has sold nearly its entire shareholding in non-banking lender SBFC Finance Ltd in a block deal on Tuesday.

Arpwood and its affiliates, part of the promoter group of the MSME lender, have bagged nearly Rs 495 crore ($59.3 million as per current forex rates) from the latest block deal.

After its initial investment in SBFC Finance in 2017-18, Arpwood has pocketed a total exit value of Rs 1,050-1,100 crore till date. This translates into a 5x multiple on invested capital (MOIC) for the PE firm, with an internal rate of return (IRR) of around 35-40%. Private equity players usually chase a benchmark 20% IRR on their investments.

This is unlike its exit from Suryoday Small Finance Bank, where it booked a loss.

SBFC, which provides loans to entrepreneurs, small business owners, self-employed individuals, salaried and working-class individuals, refiled its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India (SEBI) last year, reducing its IPO size to Rs 1,200 crore.

The new filing, which reduced its offer for sale, saw its investors including Arpwood and New Zealand-based billionaire Richard Chandler's Clermont Group tweaking their exit plan, reducing the size of the shares they planned to sell. The company also raised Rs 150 crore ($18.1 million) in a pre-IPO round from Singapore-based investment firm Amansa Capital in June.

It went public in August last year, listing at Rs 82 per share, a premium of almost 44%.

In the initial public offering, which was oversubscribed by over 70x, Arpwood and its affiliates sold shares worth Rs 425 crore at the price of Rs 57 per share.

Prior to the IPO, the PE firm had sold Rs 124.5 crore of shares in a secondary transaction involving public market-oriented investor Malabar, India focused British investment firm Steadview Capital, Massachusetts Institute of Technology and PE firm Paragon Partners. These shares were sold at Rs 55 per share.

Previously, in 2022, Arpwood had sold another Rs 50 crore worth of shares to Malabar at Rs 50 per share.

SBFC Finance's shares ended Tusday's session down 4.5%, at Rs 87 apiece on the Bombay Stock Exchange.

Published by HT Digital Content Services with permission from VC Circle.