Bahrain’s TAIB Bank-backed Kavveri Telecom Products is looking to raise fresh funds to be used for its proposed acquisition. The board of the firm has given the go-ahead to raise additional funds from institutional investors in India or overseas through issue of shares or convertible bonds.
This followed an announcement to acquire an unnamed radio frequency company in Europe for an undisclosed amount last month. Kavveri intends to use its low-cost Indian manufacturing operations, along with the European firm, to build its business in Europe, Africa and Latin America.
Kavveri Telecom manufactures antennas and RF (Radio Frequency) products, and has been fairly active in acquiring small overseas firms. Set up in 1991, the company had struck multiple deals in North America including those with Canada’s Trackcom Systems International (it designs and develops for defence, electronic warfare and aerospace areas), antenna manufacturer Til-Tek, DCI Canada (it operates in the area of RF products and filters) and Spotwave Wireless Inc. Canada. Kavveri had also acquired the technology and IP rights of Sigma Wireless, Ireland, from PCTel USA.
Kavveri Telecom has not said how much it intends to raise through QIP/FCCB/ADR/GDR or through any other mode of securities, and the management has been quoted in the media as saying that this is an enabling board approval.
The promoters of the firm, Shivkumar Reddy and RH Kasturi, who held just 14.6 per cent stake as of December, 2010, had raised their holding through a preferential allotment worth Rs 45.2 crore ($10 million) early this year. Although the open offer did not garner much, they hold 38.88 per cent now. They also picked equity convertible warrants along with other non-promoter strategic investors.
The board also gave a go-ahead for promoters to part-convert the warrants and the outside investors to fully convert the warrants into equity. This will bring in around Rs 31.6 crore into the company and the promoters’ holding is expected to shrink marginally to 37.3 per cent.
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