New Delhi, Oct. 23 -- Canada Pension Plan Investment Board (CPPIB), the North American nation's biggest public pension fund, which has moderated the pace of its private equity-style investments in India in recent years, has struck what is believed to be its fourth full exit from India portfolio, likely taking its total harvest to over $1 billion, VCCircle has gathered.
CPPIB, which struck a mere handful amount of bets in India this year including two credit deals, one private equity investment and one limited partner-style bet, has likely sold its entire 2% stake in National Stock Exchange (NSE), latest shareholding disclosures show.
Given the price at which a large chunk of NSE shares have changed hands in the private market in the last three months, CPPIB may have encashed as much as Rs 5,000 crore or nearly $600 million.
It invested around Rs 1,500 crore (just under $200 million then) in NSE via tranches during 2021-22.
That way, it has churned out 50-55% annualised returns in local currency and 45-50% in dollar terms in the exit, as per VCCircle estimates. This is more than three times the commercial grade returns chased by alternative investors. However, pension funds have a more conservative expectations in terms of returns.
NSE, backed by both private equity and venture capital investors including ChrysCapital, TA Associates, Temasek, Premji Invest and Tiger Global among various family offices and other institutional and individual investors, is a privately held firm that has long been waiting to go public.
An email query to CPPIB spokesperson did not elicit any response till the time of publishing this article.
For CPPIB, this comes after three full exits from its India portfolio. It had sold its entire stake in Delhivery and is also believed to have exited its investment in Nykaa pocketing a total of around $200 million. Early this year, it also exited Indus Towers booking a loss.
In Delhivery, the pension fund had invested around $115 million, or Rs 825 crore, in 2019, via a secondary transaction.
The Canadian investor didn't sell any stake in Delhivery when the company went public in May 2022. In April this year, it sold a little less than half its 5.96% stake in the company for about Rs 900 crore ($110 million) through a secondary market transaction. In the process, it took out its principal investment amount.
Shares of Delhivery touched a one-year high of Rs 488.05 apiece in February this year, marking a sharp recovery from a one-year low of Rs 354.50 in December last year. The shares, however, lost momentum since then.
CPPIB's total harvest from Delhivery was almost Rs 1,810 crore, or a tad more than double its investment over a holding period that stretches to almost five years.
This translates to an internal rate of return (IRR), or annualised return, of about 18-20% in rupee terms, as per VCCircle estimates, near the lower end of the 20-30% that PE/VC investors typically chase at the fund level in India.
In the case of Nykaa, CPPIB initially invested in November 2022, putting in almost Rs 300 crore. The following month, in December 2022, it invested another Rs 368 crore in tranches, taking its stake in the company to 1.40%.
The Canadian fund invested a little more in Nykaa in 2023 across multiple tranches as the company's shares came under pressure. It likely put in around Rs 30-40 crore in the company during this period.
Nykaa's shares touched a one-year low of Rs 130 apiece in August last year. The shares had bounced back since then, in line with a broader market rally.
CPPIB likely exited Nykaa almost on a par. This essentially means it likely didn't make any profit from the share sale in rupee terms despite holding the stock for more than a year and a half. The pension fund may even have taken a hit in dollar terms given the rupee's weakness against the greenback.
CPPIB does not figure among Nykaa shareholders holding over 1% stake as of September, though it is not clear if it retains some stake.
Published by HT Digital Content Services with permission from VC Circle.