Singapore Catalist-listed DeClout has entered into an agreement to sell its 36.3 million shares in Mainboard-listed enterprise hardware supplier Procurri Corporation to private equity firm Novo Tellus Capital Partners, it said in a stock disclosure on Friday.
The shares were sold by DeCLout at S$0.33 per share, payable in cash by Novo Tellus. DeClout, which will raise S$12 million ($8.8 million) through the sale, plans to use the proceeds to repay the company’s external borrowings of up to S$4.2 million and use the remaining S$7.8 million to fund M&A activities. Procurri is 47 per cent owned by DeClout.
According to the stock disclosure, the investment was made via Novo Tellus’ second fund, Novo Tellus PE Fund 2. The Singapore-based firm raised $25 million for its maiden fund which achieved a final close in 2012 and was fully deployed in 2016.
Its co-founder Loke Wai San had told DEALSTREETASIA that the industrial tech-focused firm is currently investing out of its second fund and is actively looking at several investments for 2019 but declined to comment on Fund II.
Besides Procurri, Novo Tellus has invested in five companies across the region. It has exited Singapore-based printed circuits board solution provider MFS Technology, along with majority co-investor Navis Capital Partners, last February. The investment, made in November 2014, generated 3x returns.
It is not the first time that Novo Tellus has picked up a stake in a listed company. In 2012, it picked up about 30 per cent stake in Mainboard-listed semiconductor equipment maker AEM Holdings and turned it around by helping the then-distressed company to build a stronger team.
“When we invested in that company, it was going to be delisted but couldn’t find any co-investor to do it. So we took 30 per cent in the company with our $5 million investment. Today, the company has S$250 million ($184 million) revenue and S$40 million ($29.5 million) operating profit with a market capitalisation of S$250 million. The company was not doing well but we like the end customers – one of the biggest semiconductor companies in the world and they’re a key part of the next generation manufacturing process. It wasn’t small with an S$80 million revenue already but was leaderless. So we went in with our team and managed to help the company to turn around in six to seven years’ time,” Loke had said in a past interview.
In March 2018, Novo Tellus distributed most of its shares in AEM in-specie to its LPs via its single-purpose vehicle Orion Phoenix. About 8.7 million shares of AEM or 12.89 per cent of issued shares were distributed across 13 LPs.
The share distribution has reduced Novo Tellus’ holding in AEM to about 4.28 per cent while Loke would still hold 1.99 per cent of shares.