Nalanda Capital Pte Ltd, a Singapore-based private equity firm founded by former Warburg Pincus India MD Pulak Prasad, has increased its holding to 6.3 per cent in AIA Engineering Ltd, which manufactures and designs engineering components. The Singapore-based firm acquired the additional 1.2 million shares or 1.27% stake for a total consideration of Rs 37.2 crore.

The deal will take Nalanda Capital's total exposure to around Rs 200 crore or $40 million in the company, making it one of its larger investments. Some of its largest deals include Triveni Engineering, WNS and Vaibhav Gems, which have come around $35 million.

During its latest buying, Nalanda acquired the AIA shares from Reliance Growth Fund for Rs 310 each. Shares of AIA Engineering were trading at Rs 308.05 per unit on the BSE at 12:03 pm, up 0.46 per cent against a weak Mumbai market down 0.75 per cent.

Nalanda did not figure among the AIA shareholders as of June 2011, which means the PE firm started acquiring stake in the company during the past 4-5 months. Other investors in AIA include PineBridge Investments Asia, T Rowe Price and Genesis Indian Investment Company, among others.

AIA Engineering manufactures and designs engineering components for various industries such as cement, mining and thermal power generation. The company also provides services for installation of high chromium wear and corrosion and abrasion-resistant parts used in these industries. According to its website, AIA is the second largest hi-chrome casting producer in the world.

AIA Engineering reported 21.2 per cent increase in revenues in FY11 at Rs 1,171 crore, with net profit going up 7.4 per cent to Rs 183.3 crore. For Q1FY12, it reported 9 per cent (YoY) growth in net sales while the profit after tax slipped marginally to Rs 39.7 crore. 

With the peaking demand for high chrome mill internals for the mining segment, AIA is setting up additional 1 lakh MT capacity that will involve a capex of Rs 250 crore.

“The company continues to maintain its leadership position in the industry. Its strong debt-free balance sheet accounted for low financial charges that resulted in the PAT of Rs 39.7 crore for the quarter,” said a Kotak Securities report, dated August 2011. 

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