A day after private equity firm ChrysCapital bought about 2.6 per cent stake in Blackstone-backed construction firm NCC Ltd (formerly Nagarjuna Construction Company), Norwegian sovereign wealth fund has raised its holding in the company by around 0.5 per cent to 7.3 per cent.
Government Pension Fund Global has acquired shares in the open market bulk of it from HSBC Global Investment Fund, one of the large institutional investors that has been encashing its shares in the recent past. The Norwegian fund bought shares at Rs 99 a piece, for Rs 12.7 crore or $2.9 million on Wednesday.
On Tuesday, ChrysCap acquired the company’s shares at Rs 98.99 a piece, almost half the price at which Blackstone invested in the Hyderabad-based firm four years ago, arguably at the peak market valuations.
NCC Ltd scrip was quoting at Rs 97.7, down 1.3 per cent at NSE at mid-day trade on Thursday.
The share purchase makes Norway’s sovereign wealth fund the second largest institutional shareholder in the company behind Blackstone.
Blackstone had originally invested over Rs 400 crore to pick around 10 per cent stake in NCC Ltd and had also got the right to subscribe to equity convertible warrants. However, the firm eventually did not convert the warrants into shares within the stipulated time, blaming it on pending approval for the deal from FIPB, the nodal government body clearing foreign investment in the country. Incidentally, the share price had dropped sharply at the time the deadline for converting the warrants expired.
As of March 31, Blackstone owned 9.9 per cent in NCC. Other prominent investors in the company include Rakesh Jhunjhuwala who, along with his wife, held 5.4 per cent. Promoter holding in the infrastructure firm stood at 20 per cent, a quarter of which was pledged with financial institutions.
For the Norwegian sovereign wealth fund this would come as another market purchase to up its exposure to existing Indian portfolio firm. In the January-March quarter, it had substantially raised its holding in Lanco Infratech from 2.84 per cent as of December 31, 2010, to 7.79 per cent by March 31, 2011.
Money for Norway’s sovereign fund Government Pension Fund Global comes from the cash flow from petroleum activities, which is transferred from the central government’s budget, besides the return on the Fund’s capital. This is one of the two sovereign funds of Norway, the other being Government Pension Fund, Norway, that primarily invests in domestic companies.
Said to hold assets worth half-a-trillion dollars, it is arguably the biggest sovereign fund in Europe. Earlier known as the Petroleum Fund of Norway, it changed its name four years ago. It is specially known for investing in companies with strict ethical norms including good corporate governance, besides environmental and social practices.
The fund has, in the past, publicly excluded certain companies from its pool of probable investment bets based on its ethical standards. These include global giants like EADS, BAE Systems, Boeing, Altria, United Technologies and Wal-Mart. It also has excluded India’s ITC (as it produces tobacco) and UK-based Vedanta Resources (environment & human rights abuses).
Some of its other Indian investments include Suzlon, Indiabulls Power, Jaiprakash Associates, IVRCL and Container Corporation.