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GIC, Baring India PE Investing $100M In Marico

10 April, 2012

Singapore’s sovereign wealth fund GIC and Baring Private Equity Partners India are investing Rs 500 crore (~ $100 million) in public listed consumer products company Marico Ltd.

This comes after two months of Marico announcing a deal to buy the personal care brands, including Set Wet, Livon and Zatak among others, from Reckitt Benckiser. Although, Marico did not disclose the deal value VCCircle had estimated it to be around $100 million so the latest transaction could be to fund the acquisition.

As per the deal, Indivest Pte Ltd, an investment arm of GIC is investing Rs 375 crore ($75 million) and Baring India Private Equity Fund is putting in another Rs 125 crore ($25 million) in Marico. GIC will hold 3.4 per cent in Marico while Baring India PE will pick 1.1 per cent in the firm, as per VCCircle estimates.

The shares are to be allotted at Rs 170 per share, at par with last traded market price. Marico scrip closed at Rs 170.25 a share on April 4. The stock market has been shut due to holidays and there has been no trading in the bourses since then.

Marico is holding an extra-ordinary general meeting on May 2 to seek shareholders nod for the fresh share allotment.

Kotak Mahindra Capital and Citigroup Global Markets India are the advisors for the transaction.

In February, Marico said it is acquiring the personal care brands from Reckitt Benckiser which, in-turn, had acquired these brands from Paras Pharmaceuticals as part of a bigger deal completed during April 2011.

Reckitt Benckiser had acquired private equity-controlled Paras Pharmaceuticals for Rs 3,260 crore ($726 million at that time). Private equity firm Actis, which acquired 63 per cent stake in the Ahmedabad-based firm in 2006, exited the investment along with Sequoia Capital India and the promoter group.

Marico struck a deal to acquire all key assets including the intellectual property rights, supply agreements and third party manufacturing agreements. These assets are to be transferred to a separate company in which Marico will acquire 100 per cent equity, as per the arrangement.

The latest deal comes as yet another private equity transaction in the consumer goods sector. Early this year, another sovereign wealth fund of the Singapore government Temasek had invested Rs 685 crore ($135 million) to buy 4.9 per cent stake in public listed Godrej Consumer Products Ltd, in the single largest alternative investment deal in the Indian FMCG industry.

Temasek has become the largest institutional shareholder in Godrej Consumer, the flagship of the $3.4- billion Godrej group.

The deal would help Godrej Consumer finance its aggressive inorganic strategy, wherein it has acquired seven companies across the world since 2010 and consolidated its holding in two joint ventures.

Investors:

Baring Private Equity Partners India is investing in Marico from its third fund but with latest deal it has placed a bet on an FMCG firm after more than a decade. Its last deal in the sector was way back in 2000 when it invested in Jyothy Laboratories Ltd, which makes and sells post-wash fabric whitener under the brand Ujala. Jyothy Laboratories went public in 2007.

In the meantime, Baring India PE has been active in betting on public listed firms out of its active current fund which raised $570 million in 2007. It has invested in Shilpa Medicare, Muthoot Finance, Manappuram Finance and TD Power Systems.

Indeed, for GIC too this deal comes after a long gap in the consumer products and services business. Six years ago it had co-invested with Actis in Bangalore-based Nilgiri Dairy Farms, which runs a retail chain of dairy and dairy related products. Actis owns majority stake in the backend firm which handles logistics for the front-end retail chain as FDI norms does not allow foreign investment in front-end multi brand retail.

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GIC, Baring India PE Investing $100M In Marico

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