Baring PE Asia to invest $260 mn in Lafarge India

Will take 14% stake; transaction will accelerate the cement major's growth plans in India

Baring Private Equity Asia is taking a 14 per cent stake in the India unit of Lafarge SA, the France-based cement-maker. This would be the largest PE investment in the sector here.

Lafarge said it had signed an agreement to raise ^200 million ($260 million or Rs 1,427 crore) through the capital increase subscribed by Baring PE and representing a 14 per cent minority stake in its Indian subsidiary, Lafarge India Pvt Ltd.

In 2010, PE major Kohlberg Kravis Roberts (KKR & Co) had bought a 21 per cent stake in an unlisted entity of Dalmia Cement (Bharat)-Avnija for Rs 750 crore.

“This transaction, subject to the approval of local regulatory authorities, will accelerate Lafarge’s growth plans in India in all its product lines — cement, aggregates and concrete,” said a company statement.

The debt-ridden parent company, Lafarge, has been struggling to reduce its debt of £12.2 billion. As the parent company is unable to fund the expansion of its India unit, the company has opted for equity dilution to raise funds.

Other PE investors in the race for the Lafarge India stake were the Singapore government-owned Temasek and Carlyle. Other top PE deals in the sector have been Credit Suisse PE’s $32-million investment in Binani Cement, JP Morgan Partners’ $27-million deal with Binani Cement and IFC’s $15-million deal with Vicat Sagar Cement.

Lafarge started its India operations after buying Tata Steel’s cement business in 1999. It acquired Raymond’s cement division in eastern India for Rs 785 crore in 2000.

In 2008, it acquired the ready-mix concrete business of Larsen and Toubro.

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.