INDIA BUSINESS WORLD - JUNE 1st - JUNE 30th - 2008
PE FIRM PICKS 8% IN ALL ARM FOR $20M
ASHOK Leyland’s sister company Hinduja Foundries has raised $20 million by placing 8% stake with private equity firm Amansha. The PE firm is sponsored by the $40 billion PE fund Farralon. The placement is a primary share issue done through equity expansion via its GDR.
Hinduja Foundries (HFL) will use the money to finance expansion of its capacity to 230,000 tonnes per annum, more than double its current capacity.
HFL, then Ennore Foundries, was hived off from Ashok Leyland almost ten years ago. Two years ago, ALL sold group company Ductron Castings to Ennore Foundries and last year, the promoters of the company, the Hindujas, indicated that they would bring down their holding in Ennore Foundries from 80% to 75% to fund its expansion.
Ennore Foundries is more than doubling its capacity to 230,000 tonnes per annum at a cost of Rs 350 crore. Says Hinduja group CFO Prabal Banerjee: “Investors picked up the 8% stake through the GDR issue at a nearly 80% premium to market rates.” Both Hinduja Foundry and ALL are listed companies. Sources also say the entire Hinduja group is looking at as many as five merger & acquisition deals, both domestic and overseas. The group has already indicated it would invest around $50 billion in India in various businesses in IT, power, real estate, healthcare as well as automobile sector. Officials have also indicated the group is looking at acquisitions in a number of these businesses.
Indeed, the group has recently upped its ante on the automotive front. It’s getting aggressive in components as well as commercial vehicles. In the latter business, ALL first acquired Czech truckmaker Avia and then recently entered into a joint venture with Nissan to make light trucks and engines. Nissan Motor and Ashok Leyland are investing about $500 million in three joint ventures for light commercial vehicles, engines and other components. The vehicle manufacturing company will be 51% owned by Ashok Leyland and 49% by Nissan. On the other hand, Nissan will own 51% of the company that will manufacture and assemble engines and other components that will also be exported. A technology development company will be owned equally.
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