AION Capital Partners, a special situations investor, has invested around $150 million in the holding company of Gautam Thapar-promoted Avantha Group, said sources familiar with the development. The funds will be used by the $4 billion group, whose companies include paper maker Ballarpur Industries Ltd and electrical appliances maker Crompton Greaves, to repay debt and release pledged shares of the promoters.
AION, the joint venture between Apollo Global Management—an alternative assets manager with $70 billion of AUM—and ICICI Venture—an arm of India's largest private sector lender—has roped in two of its limited partners (LPs) for the transaction which closed last week.
As a part of the transaction, Kalpesh Kikani, managing director at AION Capital, has joined Avantha Holdings’ board.
The deal involves AION subscribing debentures of Avantha Holdings with assured minimum returns in mid-teens, said the source. The upside of the investment is linked to performance in shares of Crompton Greaves, in which Avantha Holdings has 40.64 per cent stake.
Emails sent to Avantha Group and AION spokespersons did not elicit a response at the time of filing this article.
One source said Crompton Greaves could be a major beneficiary with a revival in capex cycle domestically and European markets bottoming out. This, coupled with the depreciation in rupee, has made the company more competitive against its European and Chinese rivals.
The deal was first reported by The Economic Times, which also stated that KKR & Co is expected to invest $100 million in Avantha Holdings in a similar deal. KKR has also invested in the group's power utility business Avantha Power & Infrastructure along with Faering Capital.
Avantha Group has also raised private equity funding for its other businesses, like $175 million from GIC Special Investments and JP Morgan for Ballarpur Paper Holdings B. V, a subsidiary of Ballarpur Industries Ltd. Avantha also raised $10 million for its processed foods company Global Green Company from Rabo Equity Advisors.
AION looks at investing in special situations, including financial restructurings, recapitalisations, leveraged buyouts and promoter financings. AION had first close of its debut fund at $300 million to $350 million and is targeting up to $700 million.
Avantha would be the second investment of AION in the last six months, after it invested in Jyoti Structures Ltd, a player in power transmission, distribution and substation-related engineering, procurement and construction (EPC) projects.
(Edited by Joby Puthuparampil Johnson)