Private equity firm Bain Capital is making an open offer for a 20% stake in Kolkata’s Himadri Chemicals & Industries. The company had earlier said that Bain Capital India Investments would invest upto a total of $124 million in the Kolkata based manufacturer of coal tar. The open offer will start on February 25, 2010 and will end on March 17, 2010. The open offer will be made at Rs 400 per share, which is the same as the price of the preferential allotment.
Share of Himadri were trading Rs 421.80, up by more than 1.5% at noon on Thursday. Himadri reported revenues of Rs 375 crore in FY09 with profits of Rs 46.7 crore. Himadri is the largest manufacturer of coal tar pitch in India with a market share of 70% in terms of sales.
As part of the deal, Himadri Chemicals is issuing 6.31 million shares at a price of Rs 400 a share to Bain Capital which would amount to investment of Rs 252 crore ($54 million). Bain could end up increasing its stake to nearly 36% if the open offer is completely successful. Bain could buy nearly 8.2 million shares, representing in aggregate 20% of the fully diluted equity share capital of Himadri Chemicals. Bain Capital has $65 billion worth of assets under management and opened its India office in 2008 with appointment of Amit Chandra, former partner at PE firm New Silk Route.
Boston-based Bain Capital, for whom Himadri is the debut deal in India, could end up spending $70 million or Rs 328 crore for the offer. Another large shareholder at Himadri is Citigroup Venture Capital International (CVCI), the PE arm of US-bank Citigroup, who has a 14.69% stake. The PE firm bought the stake for a sum of Rs 127 crore through a mix of equity and warrants between 2006 and 2008. The value of this stake as per Himadri’s clsoing price on Wednesday is Rs 197 crore.
The funds from preferential issue will be used by Himadri to expand the current line of businesses as well as to further forward integrate into other value added downstream products. It has already done forward integration by adding carbon black capacity of 50,000 MTPA, which it plans to expand to 90,000 MTPA.