Thai Union Group PCL, the world's largest producer of canned tuna, is looking to expand its association with Indian shrimp processor and exporter Avanti Feeds Ltd by acquiring a strategic stake in its newly spun-off frozen foods business for Rs 125 crore ($18 million).

The Hyderabad-based company said wholly owned unit Avanti Frozen Foods Pvt Ltd will issue fresh shares to Thai Union. Avanti Feeds had created the unit last year and moved part of its existing business into the new venture.

It didn’t share details of the stake but the foreign partner is likely to own around 40 per cent of the new firm, as per VCCircle estimates.

Last year, Avanti Feeds had decided to transfer its shrimp processing facilities at Ravulapalem, in Andhra Pradesh’s East Godavari district, to Avanti Frozen. It had also approved a plan to set up a new shrimp processing facility at the same location. 

Avanti had itself put Rs 84.6 crore in the unit through a rights issue of about 60 lakh shares in December.

The proposed transaction with Thai Union is at Rs 313 apiece for about 40 lakh shares as against the rights issue of Rs 141 each.

The company said on Wednesday that, as per the joint venture agreement between the two parties, Thai Union will nominate two board members of the unit while the Indian partner will have three board members.

Established in 1993 by late industrialist Alluri Venkateswara Rao, the firm is engaged in processing shrimps besides shrimp feeds. It exports shrimps to the US, Japan, Australia and the UK. Bulk of its revenue, however, comes from shrimp feed.

The company was set up in collaboration with one of the world's leading shrimp feed manufacturers, the Pingtai Enterprises Co, Taiwan. It later joined hands with Thai Union Feed Mill Co (formerly Aqua Star) of Thailand.

Thai Union separately owns a 25.12 per cent stake in Avanti Feeds. The promoters own 43.95 per cent of the company.

Avanti Feeds posted net revenue of Rs 1,776 crore and net profit of Rs 115.9 crore for the year ended March 31, 2015.

Shares of Avanti Feeds closed at Rs 405.80 each on the Bombay Stock Exchange, up 0.27 per cent in a strong Mumbai market on Wednesday.

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