In one of its largest equity deals in the country, International Finance
Corporation (IFC), the private sector investment arm of the World Bank, is
picking around 12% stake in Polycab Wires for Rs 551.5 crore ($120 million).
The deal values the flagship cable manufacturing business of Mumbai-based
Jaisinghani family at Rs 4,600 crore ($1 billion).
The deal involves a mix of fresh shares and warrants. According to sources, IFC
is picking a 10% stake for around Rs 450 crore besides picking warrants which
would give it an additional 2% equity stake for around Rs 100 crore. These
warrants will be fully paid and will be convertible based on achievement of
certain financial milestones.
Polycab is one of the largest domestic players in the market for cables. It is
the flagship company of the Polycab group, which has eight cable manufacturing
companies and is the leading manufacturer of power cables and light duty cables
in India. Besides manufacturing of insulated wires and cables, it is also
engaged in manufacturing of optical fibre cables. The group has been clocking
25% annual growth in revenues.
Though the exact revenue of Polycab could not be ascertained, it is understood
to have a topline of more than Rs 1,000 crore. The firm has an authorised share
capital of Rs 80 crore with a paid up capital of Rs 60 crore. The shares are
being placed at a premium of Rs 664 to the face value of Rs 10.
The firm is undertaking a capital expenditure program spread over the next
two-three years at its existing production units. A part of the funds being
raised will be used for making downstream investments in partnership firms of
the group, including Bharat Cables, Polycab Industries and DK Plastic
Industries. These partnership firms are being converted into companies.
IFC has largely been focusing on smaller deals in the $20-50 million bracket.
However, it has also invested $100 million plus in a handful of companies,
including Tata Steel, Cairn, HDFC, ICICI Bank and HDFC Bank.
Source: Economic Times
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