Talks in final stages to invest nearly Rs 1,629 crore, say sources
Three private equity (PE) majors are in the final stages of negotiations with Lafarge India, country arm of the France-based multinational in building materials, to acquire a minority stake.
The three PE entities are the Singapore government-owned Temasek Holdings, Carlyle and Standard Chartered PE. According to sources in the know, these three are in the final stages of talks to invest $250-300 million (Rs 1,358-1,629 crore) in the company. There were other PE entities which were interested at one stage, such as KKR, TPG Capital and Blackstone; these have since withdrawn, it is learnt. Lazard is advising Lafarge India for the fund raising.
Since global PE major Kohlberg Kravis Roberts’ buying a 21 per cent stake in an unlisted entity of Dalmia Cement (Bharat) for Rs 750 crore in 2010, the sector has been an attractive area for investors. When queries, Tan Yong Meng, spokesperson for Temasek, said: “As a company, we are unable to comment on market talk or speculation.” A Carlyle spokesperson said the same thing. An email to Lafarge India did not elicit a response till the time of going to press.
Lafarge started its India operations after buying Tata Steel’s cement business in 1999. In 2000, Lafarge had acquired Raymond Ltd’s cement division in eastern India for Rs 785 crore. The company entered in the area of ready-mix concrete in 2008 by buying Larsen and Toubro’s business. With its Concreto and Duraguard brands, Lafarge now has four cement factories in India, two in Chhattisgarh and grinding units in Jharkhand and West Bengal. It runs 80 plants in the ready-mix concrete business.
The parent company has been struggling to reduce its debt of ¤12.2 billion and so, is unable to fund the expansion of its subsidiary in India, the reason cited for Lafarge India’s plans raise money through equity dilution. Since 2005, the Indian cement sector has witnessed six PE deals worth $248 mn, while 27 mergers and acquisitions worth $1.8 bn took place during the same period.
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