PE fund AION fully exits Varun Beverages, walks away with 2x returns

Company News

Nearly three-and-a-half years after it invested $90 million in Ravi Jaipuria-promoted Varun Beverages, the bottlers for beverage giant Pepsi, private equity fund AION has decided to completely exit the company.

In a block deal, AION has sold its 4.5 per cent stake in the company at Rs 850 a share, a slight premium over the stock’s closing price of Rs 844.75 on the National Stock Exchange (NSE) on Tuesday. According to sources, this translates into a 25 per cent return on equity per year in dollar terms, or 2x returns over the holding period. The fund generated 2x on equity invested in the company. When contacted, Parth Gandhi, senior partner and managing director of AION, declined to comment on the transaction.

AION, a joint venture between Apollo Global Management and ICICI Venture, had invested $90 million in Varun Beverages — half of that in debt and half in convertible debentures.
In 2016, Varun Beverages came up with a Rs 1,100-crore initial public offering (IPO), which was subscribed 1.8 times at Rs 445 a share. After the company was listed, AION sold its stake in various tranches.

AION has so far invested in a number of Indian companies, the latest being Monett Ispat, the steel company it acquired as part of a consortium with JSW through the insolvency route, paying Rs 2457 crore for the deal. This year, it also acquired information technology (IT) and back-office operations of InterGlobe Technologies, the Rahul Bhatia company that runs IndiGo Airlines, for $230 million. In 2016, it also bought — along with partners like former Genpact chief executive Pramod Bhasin and GE commercial finance business head Anil Chawla — the commercial lending and leasing business of GE Capital for $360 million.


 Varun Beverages, the flagship company of the Ravi Jaipuria group, in February this year cemented its long-term relationship with PepsiCo.

5 factors that drove Sensex 500 points higher ahead of Interim Budget 2019

Interim Budget 2019:

Markets gained ground on Thursday with the S&P BSE Sensex rallying over 500 points, or around 1.5 per cent, in intra-day deals. On the National Stock Exchange (NSE), the Nifty50 moved up around 1.3 per cent, or 140 points, to hit an intra-day high of 10,813.
Here are five factors driving the markets:

Status quo by the US Federal Reserve: The US Federal Reserve held rates steady at the end of its two-day meeting, which ended Wednesday. The Federal Open Market Committee “will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate,” the central bank said in a statement Wednesday.

“FOMC statement and Powell’s press conference confirm our view that the Fed’s pause is, in reality, the end of the hiking cycle. We expect the Fed’s target range for the federal funds rate to remain unchanged for the remainder of the year, followed by rate cuts in 2020 as the economy starts to slide into a recession," said Philip Marey, senior market strategist at Rabobank International.

Supportive global cues: Asian stocks rose to a four-month high on Thursday after the US Federal Reserve pledged to be patient with further interest rate hikes, signalling a potential end to its tightening cycle amid signs of slowing global growth. MSCI's broadest index of Asia-Pacific shares outside Japan rose to its highest since October, while Japan's Nikkei moved up 1 per cent.


 Interim Budget & fiscal prudence: Finance minister Piyush Goyal will present the Interim Budget 2019 on Friday. Though markets expect the proposals to have a populist undertone ahead of general elections scheduled for April / May 2019, they do not expect the government to sway significantly from the path of fiscal prudence.