Private equity firm Creador is closing its third deal in India by picking up over 11 per cent stake in tile manufacturer Somany Ceramics. This could be the firm’s first bet in the non-financial space by the investment firm which has previously invested in Repco Home Finance and Cholamandalam Investment & Finance Company Ltd, the Murugappa Group promoted non-banking finance company.
Creador will pick up the stake in Somany Ceramics for around Rs 50 crore ($8 million) through its second fund.
Under the deal, Latinia Ltd (an affiliate of Creador II LLC) will buy over 4.34 million shares or 11.19 per cent stake in the Delhi-based company. The shares will be subscribed at Rs 115 per unit.
Somany Ceramics' scrip was up 2.5 per cent in early trades quoting at Rs 118.8 on the BSE in a strong Mumbai market on Monday. The company’s share price hit a 52-week high of Rs 119.8 in intra-day trade on Monday.
Creador, founded by former ChrysCapital managing director Brahmal Vasudevan, manages a $130 million fund and is raising $250-300 million for its second fund.
Founded by HL Somany in 1969 as Somany Pilkingtons, the firm has plants in Kadi (Gujarat) and Kassar (Haryana). It markets its tiles under brand names like ‘Somany’, ‘Durastone’, ‘Duragress’, ‘VC Shield’ and ‘Somany Express’. The company is also present in the sanitary ware segment through outsourcing from domestic and global markets under the brand ‘Acquaware’.
Last year, Somany acquired two Morbi-based companies—Vicon and Amora—for Rs 15 crore to increase production capacity to 41 million square metres (million sqm) per annum from its existing 36.5 million sqm.
For the first six months of FY14, Somany reported a 26 per cent rise in income to Rs 564.34 crore but net profit fell 9 per cent to Rs 12.07 crore compared with the same period in FY13. Somany Ceramics reported a 27.6 per cent increase in profit after tax (PAT) at Rs 31.59 crore in FY13 with operating income up 20 per cent to Rs 1050.15 crore compared with FY12.
The ceramics segment has also seen investments by WestBridge Capital and Nalanda Capital in the recent past.
(Edited by Joby Puthuparampil Johnson)