Creador exits India’s Somany Ceramics for $50m

21.04.17 / Author: Holden Mann, Asian Venture Capital Journal

South and Southeast Asia-focused mid-market GP Creador has fully exited its investment in Indian tile maker Somany Ceramics for INR3.26 billion ($50.4 million).

The sale gives Creador a 5.3x multiple in rupee terms on its investment in the company, according to a release. The GP initially committed INR499.9 million to Somany via its affiliate Latinia Limited in 2014 for an 11% stake, and invested a further $2 million the following month from its own account.

The buyers of Creador’s shares were not disclosed, though market data show a Franklin Templeton mutual fund paying INR969 million for part of the GP’s stake.

Somany was Creador’s third portfolio company in India and represents both the second investment and the second exit from its second fund, which closed in 2014 at $330 million. The Somany investment was preceded by a $19.7 million commitment to Malaysian payment services provider GHL Group, which the firm exited earlier this year to Actis. Creador is now investing its third fund, which closed last year at $415 million.

“Creador is pleased to have played a role in supporting Somany during this growth phase, including being an active board member and providing strategic advice to support their growth and expansion plans,” said Anand Narayan, senior managing director at Creador. “We remain confident in the long-term growth prospects of Somany and believe that the company will continue to create value for all its stakeholders.”

Somany, founded in 1969, claims to be India’s third-largest tile maker, with 60 million square feet of factory space. Along with ceramic tiles, polished vitrified tiles and glazed vitrified tiles, the company also makes sanity wares and bath fittings.

According to its most recent annual report Somany’s revenue rose from INR15.5 billion in the year ended March 2015 to INR17.4 billion the following year. Over the same period pre-tax profit grew from INR655 million to INR909 million.

The growth came despite what the company characterized as a challenging year marked by sluggish growth in the construction industry leading to decreased demand, coupled with mass dumping of China-produced tile products in India. However, demand from the government and commercial real estate sectors remained healthy.