Updated (02/01/10): According to a statement issued by Himadri Chemicals & Industries on Saturday, global private equity firm Bain Capital India Investments would invest upto a total of $124 million in the Kolkata based manufacturer of coal tar.
As part of the deal, the company would issue 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). This would be equivalent to 15.39% of the fully diluted and expanded share capital. Since the investment is above the 15% limit for triggering an open offer, Bain Capital would be making an offer to public shareholders for acquiring another 20% stake. This would mean Bain Capital could invest another $70 million or Rs 328 crore to acquire stake 20% more stake in Himadri.
The issue proceeds will be used to expand the current line of businesses as well as to further forward integrate into other value added downstream products, a statement said. The company plans to expand capacity in power generation, besides expansion in China and other global markets.
Anurag Choudhary, CEO, Himadri, said: “Himadri is a leader in its business segments in India. We hope to leverage their (Bain Capital's) investment and value addition expertise to help take Himadri to a global leadership position.”
Himadri Chemicals is a leading global manufacturer of coal-tar pitch and advanced downstream chemical products which are used in the manufacture of aluminum, steel, tyres, building products, lithium batteries and certain chemicals, all linked to the core sector growth of India.
UBS Investment Bank and Enam, respectively, acted as financial advisors to Himadri and Bain Capital on this transaction. Argus Partners and AZB & Partners, respectively, acted as
legal advisors to Himadri and Bain Capital. Kirkland & Ellis LLP acted as international legal
counsel to Bain Capital.
Posted on 31/12/09: Here is the last private equity deal of the year. Bain Capital India Investments is planning to invest $53.7 million or Rs 252 crore in Himadri Chemicals & Industries Ltd, a company that develops, manufactures and markets chemical products. It's just that it turned out to be a private equity investment in a public company.
The shares of Himadri were up by nearly 4% on close of trade today at Rs 442. The shares to Bain will be issued at a discount price of Rs 400 per share.
Interestingly, this is the first private equity deal of Bain Capital in India. Amit Chandra, former partner of New Silk Partners, had taken over as the chief of Bain Capital in India last year. Bain Capital manages $65 billion in assets across strategies strategies like private equity & venture capital as well as long/short public equity, credit products, and global macro hedge funds.
In fact, another global buyout fund Apollo Capital Management also debuted this year as it invested $100 million in Dish TV, the direct to home business promoted by media house Zee group.
Himadri Chemicals informed the stock exchange that its board has approved the issue of 63,10,000 equity shares of Rs. 10 each to Bain Capital India Investments and / or its affiliates at a price of Rs. 400 per share on preferential basis. The company's shareholders will meet for an Extra Ordinary General Meeting (EGM) on January 29, 2010, to approve the deal.
Bain's investment would be equivalent to about 15.39% in the company post conversion. This could lead to an compulsary open offer for another 20% stake under SEBI Takeover Code. The promoters could also subscribe more shares in the company in order to avert the open offer. Citigroup Venture Capital International, the PE arm of US-bank Citigroup, holds a 14.69% stake in Himadri.
Himadri Group of Industries has seven public limited companies under its banner with interests in chemicals, cold storage, iron and steel and finance.