Abu Dhabi's Al Dahra Holdings LLC is picking up a 20 per cent stake in food products maker Kohinoor Foods Ltd for Rs 112.8 crore ($18.8 million). The deal involves Al Dahra International LLC, a subsidiary of Al Dahra Holdings, buying shares at Rs 160 per unit, which is over four times Kohinoor Foods’ closing price on the stock exchange on Friday.
Kohinoor Foods’ scrip shot up 19.92 per cent on Monday morning, hitting Rs 46.05 a share, on the BSE. This gives the firm a market capitalisation of Rs 129.86 crore.
Kohinoor Foods will issue a little over 7 million shares to Al Dahra International. The deal also gives Al Dahra the right to buy 4.99 per cent more within six months from the date of completion of the transaction.
"The investor will have the right to execute a sale of its entire investment only after three years from the date of allotment," said a filing to the exchange. Al Dahra will also have the right to nominate a director on the board of Kohinoor Foods.
Al Dahra and Kohinoor Foods have also entered into a joint venture to develop and manage a brown-to-white rice facility in Abu Dhabi. Kohinoor will have a 20 per cent stake in the JV, called Al Dahra Kohinoor, and also the right to appoint a director on its board.
This facility will have a capacity of 60,000 MT scalable to 100,000 MT besides a storage facility of 30,000 MT. The JV will buy minimum 25,000 MT of basmati rice from Kohinoor Foods every year.
Al Dahra is active in the agricultural sector and specialises in the production of agricultural products and animal feed. It has made investments in countries such as the UAE, the US, Spain, Serbia, Egypt and South Africa.
This is the second major inbound deal in the food products this year after Qatar-based Hassad Food acquired 51 per cent stake in Bush Foods Overseas Pvt Ltd, a Delhi-based firm that makes and exports basmati rice, for $100 million earlier this year.
This is also the second major strategic deal by Kohinoor Foods in two years. In 2011, US spice maker McCormick & Co formed a JV with Kohinoor Foods to market and sell the latter’s basmati rice and food products in India. The deal involved McCormick investing $115 million for an 85 per cent stake in Kohinoor Speciality Foods India Pvt Ltd, valuing the firm at $135 million.
(Edited by Joby Puthuparampil Johnson)