Heineken might be trying for larger role

Initiates discussions with Mallya to gain control, even as lenders to UB Group are looking to monetise UBL shares

Dutch brewing giant Heineken is understood to be in various stages of discussion with UB Group chairman Vijay Mallya to gain more control over India's largest brewer, United Breweries (UBL).

Mallya, during the past two days, had ceded a marginal stake in it, allowing Heineken to be the single largest shareholder.

It is understood that lenders to the UB Group, which hold shares of UBL as pledged securities, are looking to encash these, as the UB Group has been facing difficult times in repaying debt, raised through its various arms to primarily fund the now-grounded group company, Kingfisher Airlines.  

A regulatory filing made on Thursday revealed the shares were made available for purchase to Heineken International BV by a lender monetising shares in the brewing arm of the UB Group, pledged by Chairman Vijay Mallya. Heineken’s share purchase on Tuesday tilts the balance in UBL in favour of Heineken, which now has a total holding of about 38.75 in the maker of Kingfisher beer. Mallya’s holdings have been reduced to 36.06 per cent, from the earlier 37.4 per cent.

Despite months of speculation that Heineken would increase its stake, the first attempt at gaining larger control came exactly five years after it first took a 37.4 per cent share in the company. According to a person familiar with the matter, the Dutch liquor giant is in discussions with Mallya to buy a larger stake, as the company — a late entrant into emerging markets — now wants to expand its presence here.

The majority of Mallya’s holdings in the company, 22.43 per cent, are pledged with various lenders and financial institutions. The lenders might be keen on first encashing a 7.28 per cent stake pledged by UB Holdings Ltd from its total 11.46 per cent stake in UBL. Lenders might seek ways to rid themselves of these shares as the high court (HC) here has admitted a winding-up petition against UB Holdings, principal holding company of the UB Group.

Lenders also gained an upper hand over Mallya when HC on Wednesday rejected a petition by grounded Kingfisher Airlines that sought to stop SBICAP Trustee Company, acting on behalf of State Bank of India, from seizing Kingfisher House in Mumbai to realise part of the debt due from the airline.

However, the value of the property is less than Rs 100 crore and lenders are exploring other means of monetising the collateral given to them in the form of shares and Mallya’s other properties. More, judge Anand Byrareddy, who’s hearing the case, has also allowed the banks to go ahead with enforcing their secured loan while the winding-up petitions are decided.

The Karnataka High Court has already admitted  two winding up petitions, one against UB Holdings Ltd and another against Kingfisher Airlines Ltd, more doors have been closing in on Mallya who has repeatedly insisted he will keep control of the UB Group companies, including United Breweries.