Karuturi Global to sell 15% stake in Dubai arm for $100 mn

World’s largest rose buds producer Karuturi Global is raising $100 million by selling a 15 per cent stake in its Dubai-based subsidiary.

The company will sell the stake in Karuturi Overseas to a private equity player valuing the Dubai-based subsidiary at over $650 million after the acquisition. The Dubai-based entity is the holding company for all the African business of Karuturi Global and contributed around 90 per cent of its revenues and net profit. The entity is currently valued at less than $250 million.

“The PE firm has valued the company for its underlying potential which would be achieved in the long term,” said an investment banking source familiar with the development. He refused to divulge the name of the PE firm.

The term sheet for the deal has already been signed and the formalities would be finished by early November. Managing Director Sai Ramakrishna Karuturi confirmed the fund raising plan through divesting stake to a private equity player. But he refused to divulge the details. Yes Bank is the advisor to the company for the deal.

The Bangalore-based company became the world’s largest grower of roses after acquiring Ethiopia’s Sher Agencies for $68 million last year, which took its annual production to 685 million stems from 150 million earlier.

The African business of Karuturi Overseas includes all the floriculture business in Kenya and Ethiopia. And it also includes its foray into agriculture products in Ethiopia. The products include palm oil, sugarcane, fresh-cut vegetables and cereal crops.

The company intends to expand cultivation to 1,20,000 hectares in the next five years, which is three times the size of Mumbai having 44,000 hectares of land. Karuturi Global, the parent company of the Dubai subsidiary, was down by 2.41 per cent to Rs 20.25 a share on the BSE on Monday.