Damani eyes partners for Ambuja Cements buy; may invest up to Rs 10,000 cr

Radhakishan Damani, the billionaire investor and promoter of Avenue Supermarts, which owns and operates the DMart chain of retail stores, is planning to join hands with other potential bidders to invest up to Rs 10,000 crore in Ambuja Cements as a financial partner, banking sources told Business Standard.

He may tie up with any consortium that plans to bid for India’s second-largest cement company, put on the block by its Swiss owner Holcim, they said.

Damani already owns a 23 per cent stake in India Cements, a South India-based cement company. “Damani is keen to increase his exposure to the cement sector and wants to join hands with a consortium or a private equity firm. He is not interested in the day-to-day running of operations. The ball is now in the court of bidders like the Adani and JSW groups,” said a banker close to the development.  An email sent to Damani did not elicit any response.

Damani is credited with creating India’s biggest grocery retail chain D-Mart, whose parent Avenue Supermarts had a market valuation of Rs 2.57 trillion as of Wednesday. Damani’s stake in Avenue Supermarts is worth about Rs 1.94 trillion.

 Damani, who started as a stock broker, prefers to keep a low profile and has seldom talked about his investment plans. Apart from India Cements, he holds stakes in VST Industries and Andhra Paper.

According to bankers, both the Adani group, which is the front runner to buy Ambuja, and the JSW group are talking to various private equity funds and banks to tie up finances for the bid, which would cost them as high as $10 billion (about Rs 76,000 crore), including the open offers for Ambuja and its subsidiary ACC. “Damani is not only a strong financial partner but can also bring in other financial partners who want a piece of the cake,” the banker quoted above said.

Damani has a close partnership with former Enam Group founders like Vallabh Bhansali and Nemish Shah, who have a stock portfolio worth billions of dollars.

Ultratech, the banker said, is a dark horse, which may make a bid for the company with the Aditya Birla group raising funds by diluting a minority stake in their cement flagship to raise Rs 20,000 crore, and the rest via debt. “There may be a Competition Commission of India objection with Ultratech acquiring Ambuja Cements, but they can always sell the overlapping plants in western India,” the banker said. Ultratech did not comment on the market speculation.  

Ultratech will retain the number one position with 120 million tonnes a year capacity. The acquisition of Ambuja Cements and its subsidiary will give the acquirer a 64 million tonnes a year capacity.

Anil Singhvi, former cement industry veteran, said the sale of the India business by Holcim is a good transaction for the cement major, which will be able to raise $6-7 billion and reduce its debt substantially. “Holcim did not grow its India business in the last 15 years and it makes sense for them to sell it to the highest bidder and de-leverage at the parent level,” Singhvi said.  

Holcim will be announcing the winning bid within a week just around its annual shareholders meeting on May 4th.  

Holcim controls 63.1 per cent of Ambuja Cements, which was worth Rs 48,136 crore as of Wednesday. Shares of Ambuja closed at Rs 385 apiece while ACC closed at Rs 2,350 a share.

Cementing links

• Damani keen to join other bidders as a financial investor
• Owns 23% stake in India Cements; not interested in running day-to-day operations
• Plans to diversify portfolio to other businesses
• May monetise Avenue Supermarts stake to raise funds