Aluminum foil containers maker Parekh Aluminex Ltd is looking to raise as much as Rs 100 crore ($22 million) through a preferential allotment to a host of overseas funds including Kitara Capital.
The public listed firm is holding an extraordinary general meeting on July 25 for seeking the approval to issue equity shares on preferential allotment basis, the company said in a statement issued to Bombay Stock Exchange.
The proceeds of the preferential share issue would be used for expansion and working capital requirement of the company. The firm is planning an expansion that would absorb Rs 300-350 crore.
Parekh Aluminex is one of the largest manufacturer and exporter of aluminium foil containers, and also one of the biggest manufacturers of aluminium foil rolls and lids in India. It has manufacturing facilities located at the union territory of Dadra and Nagar Haveli.
In the past it had acquired Singapore-based firm by taking over its plant & machinery that also brought a new customer base including Emirates Airlines, Singapore Airlines, Thai Airways amongst others.
The firm is looking to dilute as much as 35 per cent stake through the preferential issue at a price of Rs 325 a share, Amitabh Parekh, Managing Director of Parekh Aluminex, told news channel ET Now.The scrip is trading at Rs 296, so the fresh issue will be almost 10 per cent premium to the market price.
The promoters holding in the company stood at 37 per cent as of March 31, 2011 and the preferential allotment will shrink it down to around 27.4 per cent, according to VCCircle estimate. The promoters who have used the creeping acquisition route to raise their stake in the company may use the 5 per cent ceiling allowed in a year under the existing norms(without triggering an open offer) to shore up their holdings, according to Parekh.
Parekh Aluminex had been on a high growth path. Between FY07-11 its topline grew almost five times to Rs 901 crore and net profit by over four times to Rs 62 crore for the year ended March 2011. The firm has a market cap of Rs 383 crore or a little over six times its trailing earnings.
For Kitara Capital, this would be third deal in India this year. The private equity firm that provides seed and early stage finance to medium-sized businesses across various sectors and geographies, had invested in MyTVS, a multi-brand auto dealership and service network, besides Mumbai-based Oil Field Instrumentation Ltd (OFIL), a provider of mud logging services to oil exploration companies.
Kitara, that invests between $10 million and $40 million in its portfolio companies, was co-founded in 2008 by Umesh Khimji (CEO of the Oman based Ajit Khimji Group) and Sachin Kamath (CIO of the Ajit Khimji Group and CEO Of Kitara Capital). Last year it had roped in Amitabh Chakraborty, former president – equity at Religare Securities Ltd, as managing director and chief investment officer.