We are pleased to announce that Pennar Engineered Building Systems (PEBS Pennar) has successfully completed an initial public offering (IPO) of its shares on the stock exchanges in India. The offering was for an equivalent of US$23.5 with a US$91 equivalent company value.
Zephyr Peacock India Fund III (ZPIII) invested in PEBS Pennar in 2013. The company is an industry leader in the design, manufacture, and installation of pre-engineered building systems. The company’s technology and services allow its customers to significantly reduce execution timelines for projects including factories, warehouses, high rise buildings, airplane hangars and multi-storied garages.
Since ZPIII’s investment, PEBS Pennar has increased its market share and increased its revenues and operating earnings by 50%. As part of the IPO, ZPIII sold 60% of its shareholding, resulting in a gain of 2.3x its original investment and an IRR of 40% (In USD, net of all deal expenses and gross of fund expenses). The fund will retain its remaining holdings for at least one year.
This is only the beginning. The Indian pre engineered buildings industry is in its early growth phase and is a high growth opportunity market. The penetration of pre engineered buildings in the overall construction segment is only 4%, significantly lower than other advanced economies. We expect that this percentage will increase to 25% over the next 10 years. PEBS Pennar is dedicated to participating in this growth and is strengthening its sales presence across India to capture new emerging construction markets. The PEBS Pennar design team is working on expanding the Company’s product portfolio by developing new capabilities in high rise construction, solar mounting structures and low cost housing.
Given the large market size and changing market dynamics within the construction industry, the Manager believes that PEBS Pennar is well positioned to capitalize on opportunities by leveraging its sourcing, design and manufacturing capabilities to become a global leader.
About Zephyr Peacock India
Zephyr Peacock India seeks to make private equity investments targeting India’s fast growing small and middle market corporate segment. In addition to providing capital, Zephyr Peacock seeks to add value to our portfolio companies by leveraging its global relationships in the international corporate and financial markets. The Fund’s management team, based in Bangalore and New York, combines local and international private equity expertise and has many years of investment and operating experience.