Even as crude oil prices have slumped back to the sub $100 a barrel mark, there is immense interest in alternate energy sources such as biofuel. In one of the big ticket deals in India, Morgan Stanley Private Equity is picking 30.4% stake in Biotor Industries for Rs 240 crore ($53 million).
VCCircle learns that Morgan Stanley arm will pick equity and compulsorily convertible preference shares totaling about 30.4% of the post issue paid up capital of the firm. The deal will value Biotor at a Rs 790 crore ($175 million).
Mumbai-based Biotor is engaged in the manufacturing of castor oil based products and derivatives which are used in various industries such as agriculture, cosmetics, electronics and telecom, food lubricants, paper and ink, paints, plastics etc. Last year Biotor had implemented a sebasic acid project and is in the process of implementing a SEZ project at Vilayat near Baruch in Gujarat. It plans to set up a manufacturing unit there.
Biotor has three subsidiaries including two wholly owned firms in US and Germany which have been set up for marketing and distributing the products manufactured by Biotor. In addition it has a 60% stake in Biotor Contract Farming which is into contract farming for castor oil seeds. Biotor is in the process of acquiring the balance shares in this firm making it a wholly owned unit.
Not much is known about the promoters of Biotor. However the firm is well capitalised. It has an equity capital of Rs 21.05 crore besides Rs 10 crore preference capital all of which is held by Indian shareholders.
The deal with Morgan Stanley will value Biotor ahead of Hyderabad based Roshini Biotech. Goldman Sachs had reportedly picked up a 25% stake in the company for around Rs 170 crore which would have valued it at Rs 680 crore (~$151 million), though there was no formal announcement of the deal yet. This was the second round of PE funding in Roshini. Last year, Origo Sino-India Plc, an investment and strategic advisory company focused on Chinese and Indian markets, picked up 20% equity stake in Roshini Biotech for a mere $2 million.
These fund raising plans are seen as a precursor to a public float by Roshini in 2011.
Another biofuel firm Universal Biofuels, which is promoted by a US based company AE Biofuels is in the process of raising funds in India through a pre IPO and IPO. This investors are not frozen yet but VC Circle learns that the firm is looking to raise around Rs 200 crore through 40% equity dilution including the pre IPO placement and the public float. This would value it at around Rs 500 crore, behind Biotor and Roshini Biotech.