Adi Godrej-led fast moving consumer goods firm Godrej Consumer Products Ltd is holding talks with private equity majors for raising around $130-$140 million as part of its overall capital-raising plans estimated at over $650 million.
Carlyle, Standard Chartered Private Equity and ChrysCapital are among those funds interested in a potential transaction, at least two sources familiar with the development told VCCircle. The funds raised through private equity would be deployed by GCPL to chase its acquisition-led growth. JM Financial is believed to be running the fund-raising process, sources added.
A Godrej spokesperson declined to comment on a VCCircle query.
In recent months, the company effected two acquisitions, Tura in Nigeria and PT Megasari Makmur in Indonesia, continuing with its inorganic growth strategy. It also acquired Sara Lee’s 51% stake in the Indian joint venture following the former’s move to exit the personal care business globally.
In FY10, GCPL reported consolidated revenue of Rs 2,042 crore (up 47%) with net profit of Rs 340 crore (up 97%). The company’s key businesses are spread across the personal care segments of soaps, hair colours, toiletries and liquid detergents, with most of them operating at margins of over 20%. It has over 10% share of the national soaps market with brands like Cinthol and Godrej No.1 and 34% share of the hair coloring market with brands like Expert and Ezee.
Last week, Godrej Chairman Adi Godrej told CNBC TV18 that GCPL would look at raising Rs 3,000 crore, or roughly $668 million going by Tuesday’s exchange rates, through a mix of debt and equity. He added that this would be raised in tranches and deployed for effecting larger acquisitions in the future, and the equity portion could be a small part of this overall fund raising exercise.
While Godrej could raise the entire cash through debt, the company would like to maintain 1:1 debt equity ratio and so it would need to raise cash through equity, he added.
On Tuesday morning, GCPL stock was quoting at Rs 305, up 2%, on BSE, with a market capitalization of Rs 9,400 crore. The BSE Sensex was down 130 points trading at 17,200 at the time of posting this story.
GCPL, along with its domestic personal care peers Wipro Consumer Care and Dabur, have been actively scouting for international acquisitions in recent times with the focus geographies being Africa, South East Asia and parts of Europe.