Affirma Capital scores ninefold return with TBO Tek partial exit

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₹300 crore then) in TBO Tek. “Multi-bagger exits in private equity are rare. When that happens it can be due to investors taking a contrarian bet, a company’s disruptive product offerings, exceptional management execution or due to strong market tailwinds.

In our case, we were fortunate that all of the above have been contributors," said Udai Dhawan, the founding partner and head of India private equity. The firm considers global buyout funds as an alternative to initial public offerings for its exit strategy. “While IPO is a good option to exit, regional and global buyout funds are also natural buyers for our stakes.

We operate in the mid-market segment and most of these funds have graduated to buyout deals. We have alternative to the IPO market," he added. In August 2019, Affirma was spun out of Standard Chartered Bank.

Since then, it has returned about ₹4,500 crore to its investors, he added. This includes exits from portfolio firms such as Craftsman ( ₹600 crore through an IPO), Reddington ( ₹1900 crore), and GMR Airports ( ₹500 crore), as well as TBO Tek. “The Reddington money multiple exit was 3.5x, while Craftsman was 7x-plus and GMR was 3.2x.

For TBO, the exit multiple is about 9x while the IRR is 55%." The PE firm manages over $3.5 billion of assets. It invests in regions such as China, India, South-east Asia, South Korea, sub-Saharan Africa and the Middle East. Since 2019, it has invested around $300 million in India and South-east Asia via dedicated funds.

It also raised a $300-million South Korea fund in the past two years. Affirma’s investments in India include EPACK Durable Pvt. Ltd, Belstar Microfinance, Prodapt Solutions, Northern Arc and Prime Focus.