BSE-listed material handling and construction equipment manufacturer Action Construction Equipment (ACE) is in talks to raise up to $10 million in a private placement from investors, at least three people with direct knowledge of the development told VCCircle. A few mid-market private equity firms, such as Banyan Tree Capital which is a structured PE firm, have expressed interest in ACE.
Sources add that the company is initially looking to raise up to $5 million but may opt for a total of $10 million, depending upon the success it meets with its proposed acquisitions.
The stake sale is likely to happen at a price of Rs 65-Rs 70 per share, a premium of nearly 40 per cent to its current market price, effectively valuing the company at around Rs 700 crore. ACE shares closed at Rs 44.25 per unit on Wednesday.
“A part of the monies raised via preferential allotment will also be used for acquisitions,” said one of the sources on condition of anonymity.
Although the firm had earlier announced its plans to float a QIP by October end, those are now shelved as it is raising capital via the PE route. An e-mail query sent to the company’s CEO office did not elicit any response till the time of writing this article.
Singhi Advisors is understood to be the advisor on the transaction.
The Haryana-based equipment maker has recently said that it is close to acquiring two companies – one in India and another in China – for a total of Rs 120 crore, in order to expand its product portfolio. ACE also plans to double its capacities during the next three years and develop the tractor market for industrial and construction haulage, according to the firm’s annual financial statement.
The company has recorded a net profit of Rs 11 crore for the first quarter of FY2011-12, up 40 per cent year-on-year. Its revenue in the quarter soared 65 per cent year-on-year, to Rs 214 crore.
The company is founded by first-generation entrepreneur Vijay Agarwal, chairman and managing director of the company. ACE equipment is used across various industrial sectors, such as infrastructure, construction, roads, engineering industry, coal mines, chemical and fertiliser plants, power stations, ports, heavy project engineering industry, railways, cement industry, oil industry and defence. The company’s product profile includes hydraulic mobile pick-and-move cranes, forklift trucks, loaders, tower cranes, aerial work platforms, etc.
Action In Infrastructure Enablers’ Space
As majority of PE funds cannot make investments in the core infrastructure owing to their ‘growth equity’ nature, a lot of action is seen in the ancillary space or infra enablers, as they are called. Recently, Clearwater Capital hiked its stake in Diamond Cables by purchasing 2.2 per cent stake for around Rs 10 crore through the secondary market, which took its total holding to 13.77 per cent. Originally an electrical products maker, the company has now diversified into a manufacturer of power transmission equipment and turnkey services provider (EPC).
NYLIM Jacob Ballas India Fund III, LLC, a Mauritius-based private equity vehicle dedicated to India, infused Rs 152 crore into SEW Infrastructure Ltd, an engineering, procurement and construction (EPC) company in Hyderabad. Axis Private Equity already has investments of Rs 126 crore in Delhi-based railway line manufacturer Harish Chandra India Ltd (HCIL) and Rs 60 crore in Vishwa Infrastructures and Services, which executes projects in water supply and sanitation sectors.