Days after acquiring Bangalore-based Gokaldas Exports, the US-based Blackstone Group, one of the world’s largest private equity firms, has decided to invest $150 million (Rs 615 crore) to acquire 12.2 per cent stake in Nagarjuna Construction Company Ltd (NCC). Post-deal, the holding of promoters in Nagarjuna will go down from 24.4 per cent to 22.2 per cent.
“The new funds will be used for investments in public-private infrastructure projects, and also to bid for larger projects. About 65 per cent of the funds will be put into special purpose vehicles (SPVs) floated for executing projects in segments of roads, power and seaports, and the balance 35 per cent will go towards working capital,” YD Murthy, senior VP, NCC, told Indiaretailing. Consequently, Blackstone will have representation on the board of NCC.
The company said its board approved the issuing of 2.02 crore equity shares at Rs 202.50 each, and 9,111,000 warrants of Rs 225 each, to Blackstone. The securities will be issued to Blackstone GPV Capital Partners Mauritius V-A Ltd, Blackstone GPV Capital Partners (Mauritius) V-H Ltd, and Blackstone FP Capital Partners (Mauritius) V FII Ltd, three subsidiaries of Blackstone. Each warrant is convertible into one equity share of Rs 2 each, at a premium of Rs 223.
Nagarjuna Construction Managing Director A Ranga Raju said, “We welcome Blackstone as a long-term partner. With its global reach and proactive approach, Blackstone brings immense value to the company.”
Andhra Pradesh-based Nagarjuna had orders of Rs 7,455 crore till June 30, 2007, from clients in roads, electricity, irrigation, power, and oil and gas. The company is also a player in real estate. Along with its subsidiaries, it has a land bank of 530 acres in Bangalore, Hyderabad, Chennai, Visakhapatnam and Kochi. Nevertheless, for the quarter ended June, Nagarjuna reported a 6.1 per cent fall in net profit to Rs 36 crore, from Rs 38.4 crore in the previous year.
Akhil Gupta, chairman and managing director of Blackstone Advisors India Private Ltd, said, “We believe that planned infrastructure expenditure, economic growth and urbanisation will drive long-term growth in India’s construction sector.”
Nagarjuna’s shares rose Rs 2.80, or 1.44 per cent, on Tuesday, to close at Rs 197.55 a share. The final approval of Nagarjuna shareholders will be sought at an extraordinary general meeting scheduled to be held on September 24.