Rivendell PE, formerly New Silk Route (NSR), will sell a large chunk of its stake in Rolex Rings Ltd during the company’s initial public offering. The private equity firm had backed the auto component maker 14 years ago.
NSR was founded in 2006 by Parag Saxena, the incumbent chief executive officer, former McKinsey chief executive Rajat Gupta, Goldman Sachs veteran Mark Schwartz and hedge fund manager Raj Rajaratnam.
It was one of the high profile private equity companies in India before the global financial crisis of 2008 derailed its investments plans. NSR had invested over $1 billion in over a dozen companies during the period.
In 2007, the PE firm had invested ₹164 crore ($40 million) in Rolex Rings. It has a 45.5% stake in the firm, as per the draft prospectus filed with markets regulator Securities and Exchange Board of India. NSR will sell 6.5 million shares through the IPO, or around half of its current shareholding.
NSR expects to fetch around ₹700 crore through the partial stake sale, said a person aware of its IPO plans, requesting anonymity.
Rolex Rings seeks to raise ₹70 crore in fresh capital, which will be utilized to fund its working capital requirements. “Like many companies which invested heavily in capex, Rolex Rings too went through a bad phase after the Lehmann collapse. Though it went into the so-called corporate debt restructuring (CDR) process, it managed to emerge out of the CDR successfully with hardly any loss for its lenders. Since then the company has been on a growth path,” he added.
Investment banks Equirus Capital, IDBI Capital and JM Financial are advising the company on its IPO. “The IPO has been in the works for years now. But the auto slowdown in 2019, followed by the pandemic created a difficult environment for going public,” he said.
Rolex Rings reported a revenue of ₹911.2 crore in 2018-19, and ₹675.3 crore in FY20. For the six months ended 30 September 2020, Rolex Rings reported revenue of ₹225.4 crore.
Rolex Rings is a manufacturer and global supplier of hot rolled forged and machined bearing rings, and automotive components for two-wheelers, passenger vehicles, commercial vehicles, off-highway vehicles, electric vehicles, industrial machinery, wind turbines and railways, among other segments. Rolex Rings, which started operations in 1988 with its first plant in Rajkot, has three manufacturing units in the region.
Gupta had stepped down from NSR in 2012 after his conviction by the US securities regulator in an insider trading case while Schwartz had left NSR in 2008.
