Creador books 3.7x on Cholamandalam sale

22.06.16 / Author: Carmela Mendoza, Private Equity International

The sale of non-banking financial company Cholamandalam comes as the firm continues to raise Creador III, which is seeking $450m.

Asian private equity firm Creador has fully exited its remaining stake in Cholamandalam Investment & Finance Company Limited (CIFCL), generating a 3.7x return multiple and an internal rate of return (IRR) of 39 percent, it said in a statement.

With this exit from CIFCL, combined with two earlier exits from Malaysian restaurant chain Old Town White Coffee and housing finance company Repco, Creador has fully exited three out of seven investments from Creador I.

The firm took a 5 percent stake in CIFCL in March 2012 for $21.3 million through Creador I, a 2011-vintage vehicle which raised $130 million. It made a partial exit from the company in October last year, realising a 2.8x return and an IRR of 33 percent, as reported by Private Equity International. The divested stake represents 36 percent of Creador’s total holding in the company.

A number of domestic and foreign mutual funds and long-term investors acquired Creador’s stake, the firm said.

CIFCL is an Indian non-banking financial company which provides financing for vehicle purchases, home equity and micro, small and medium enterprises (MSME). It has more than 534 branches across India.

Under the firm's ownership, Creador evaluated and provided strategic guidance on potential acquisitions, as well as supported market intelligence on competition benchmarking and the creation of new products. It also assisted in capital markets research, which resulted in four large brokerage houses initiating coverage of the company.

Creador manages over $700 million of assets and focuses on long-term investments in growth-oriented businesses in South and South-East Asia.

Its second fund, Creador II, held a final close on $330 million in October 2014 after receiving a last-minute commitment from fund of funds Hamilton Lane. The fund is fully invested across 13 investments, a source with knowledge of the matter told PEI.

It is currently raising capital for its third fund, which reached a first close on $250 million in September last year. The fund has a hard-cap of $500 million and will invest in consumer-driven businesses in Indonesia, Malaysia, Philippines, Singapore, India, and also in Sri Lanka.

Known investors in Creador’s funds include Hamilton Lane, Siguler Guff & Company, and Hermes GPE, according to PEI Research & Analytics.