Bain Cap executes first deal in India

Acquires 15.4% in Himadri Chemicals and Industries for Rs 580 crore.

In its first deal in the country, private equity player Bain Capital has acquired stake in a Kolkata-based coal tar manufacturing company, Himadri Chemicals and Industries. The deal is estimated at around Rs 580 crore.

In the first stage, Bain acquired a 15.4 per cent stake in Himadri for a consideration of Rs 252 crore. Since the transaction exceeded the 15 per cent trigger, an open offer for 20 per cent of the expanded equity base will be launched. This is expected to result in an outgo of around Rs 330 crore, according to a source familiar with the transaction.

In a stock exchange filing, Himadri said that an extraordinary general meeting (EGM) had been convened on January 29 to approve the issue of 6.31 million equity shares of Rs 10 each to Bain Capital India Investments or its affiliates at a price of Rs 400 per share on a preferential basis.

Himadri’s stock price on the Bombay Stock Exchange (BSE) touched a 52-week high of Rs 457.95 on Thursday, before closing nearly 4 per cent up at Rs 442.

Bain, the global private equity player with around $65 billion (nearly Rs 3.03 lakh crore) worth of assets under management, had opened its India office in 2008 but could not complete any transactions due to the global financial crisis.

Executives at Bain could not be reached for comment.

On its website, Himadri Chemicals and Industries says it is a part of the Himadri Group that has interests in chemicals, cold storage, iron and steel and finance. The company had a turnover of Rs 375 crore in 2008-09 and reported a net profit of Rs 46.7 crore. At the end of September 2009, the promoter group — led by Managing Director B L Choudhary — held a 53.35 per cent stake in the company.

Himadri Chemicals and Industries, started in 1981 with a special emphasis on coal tar and its derivatives, has also diversified into corrosion protection and manufacturing coal tar-based pipe coating products.

Citigroup Venture Capital International, another private equity firm, holds a 14.67 per cent stake in Himadri Chemicals. International Finance Corporation, the World Bank’s private sector funding arm, had extended $25 million (Rs 116.5 crore) assistance by way of foreign currency convertible bonds and external commercial borrowings.