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PE-backed Innoventive Inds Picks 85% In Salem Steel For $4.67M

09 January, 2012

Standard Chartered Private Equity-backed multi-product engineering company Innoventive Industries Ltd has acquired the business operations of the US-based steel products firm Salem Steel North America LLC.

Innoventive, through a wholly owned arm, will own 85 per cent in a new firm that has been floated for the transaction (Salem Steel NA LLC) and will pay $4.67 million (Rs 24.7 crore) for buying the existing business of Salem Steel. The balance 15 per cent stake will be retained by one of the existing promoters of Salem Steel.

The new firm will acquire inventory, receivables, book debts, furniture, fixtures, machinery, intellectual property and other intangible rights besides the ongoing business of Salem Steel. On the Bombay Stock Exchange, shares of Innoventive Industries last traded at Rs 89, down 1.66 per cent from the previous close.

Nine-year-old Salem Steel is the international producer of ERW-DOM and seamless tubing, supplied in carbon and alloy grades, as well as welded and seamless stainless steel tubing and pipe. It also specialises in cold drawn mechanical tubing, as well as hydraulic, pressure, bearing quality, among others. Its products are used in a variety of applications and industries including aircraft and automotive, decorative and medical uses, and oil & natural gas.

Salem Steel was founded by Ronald S. Herman, who serves as the president of the company. In February 2011, Standard Chartered Mid-Market Mid-Cap Fund invested $10 million in Pune-based Innoventive Industries Ltd in a pre-IPO transaction. The PE firm has raised its holding since, raising its stake to over 12 per cent in October.

Another investor in Innoventive is Kavos Capital, a special purpose vehicle set up by India 2020 Ltd (a private equity fund sponsored by Lighthouse Funds) that had originally invested Rs 15 crore in June 2008 and later brought in additional Rs 35 crore through a preferential allotment in August.

Innoventive Industries, promoted by first-generation technocrats who acquired the company in 2002, is into manufacturing and sale of precision steel tubes, tubular components, auto components, machined components and other steel products. It has six manufacturing facilities located across Pune and Silvassa.

 


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PE-backed Innoventive Inds Picks 85% In Salem Steel For $4.67M

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