Private equity firm Apollo to invest Rs. 2,250 crore in Welspun group firms
Wednesday, 29 June 2011, 19:43 IST
By IANS
By IANS
Mumbai: One of the world's leading private equity firms, Apollo Global Management will infuse about Rs.2,250 crore in Welspun Corp (WCL), a leading pipe manufacturer and some other firms of the $3 billion Welspun group, the Indian conglomerate announced Wednesday.
The other firms of the group which will see a capital infusion are Welspun Maxsteel (WMSL) and Welspun Infratech (WITL). "As part of the investment plan, funds affiliated with Apollo will invest Rs.1,305 crore in WCL, of which Rs.788 crore will be invested by way of a preferential allotment of fully or compulsorily convertible debentures and Rs.517 crore by way of non-voting global depository receipts(GDRs)," the company said in a regulatory statement.
The debentures will carry a coupon rate of 5 percent and will be mandatorily and fully converted within 18 months into equity shares at Rs.225 per share, which represents 13.3 percent of the equity capital of WCL. Apollo will subscribe to the non-voting GDR's of Rs.517 crore at the same price of Rs.225 per share.
"Welspun has a strong history of growth and profitability in global oil and gas line pipe industry and is at the cusp of becoming a leading, global integrated pipe manufacturer," said Mintoo Bhandari, managing director of AGM India Advisors, an affiliate company of Apollo.
With regards to Welspun Maxsteel, WCL will be purchasing 87.5 percent of the WMSL equity for Rs. 805 crore and Apollo will be purchasing 12.5 percent of the WMSL equity for a total consideration of Rs.140 crore. Apollo will invest an additional Rs.130 crore in this firm towards capital expenditure. The Welspun group also said that Apollo and its subsidiary firm Welspun Infratech (WITL) were in talks for an additional investment of up to Rs.675 crore in WITL in the form of debt, equity or a combination of the two.
"The end use of the funds in WITL will be project specific and the form of such investments is being actively reviewed and considered," the Indian firm said in a statement.
The other firms of the group which will see a capital infusion are Welspun Maxsteel (WMSL) and Welspun Infratech (WITL). "As part of the investment plan, funds affiliated with Apollo will invest Rs.1,305 crore in WCL, of which Rs.788 crore will be invested by way of a preferential allotment of fully or compulsorily convertible debentures and Rs.517 crore by way of non-voting global depository receipts(GDRs)," the company said in a regulatory statement.
The debentures will carry a coupon rate of 5 percent and will be mandatorily and fully converted within 18 months into equity shares at Rs.225 per share, which represents 13.3 percent of the equity capital of WCL. Apollo will subscribe to the non-voting GDR's of Rs.517 crore at the same price of Rs.225 per share.
"Welspun has a strong history of growth and profitability in global oil and gas line pipe industry and is at the cusp of becoming a leading, global integrated pipe manufacturer," said Mintoo Bhandari, managing director of AGM India Advisors, an affiliate company of Apollo.
With regards to Welspun Maxsteel, WCL will be purchasing 87.5 percent of the WMSL equity for Rs. 805 crore and Apollo will be purchasing 12.5 percent of the WMSL equity for a total consideration of Rs.140 crore. Apollo will invest an additional Rs.130 crore in this firm towards capital expenditure. The Welspun group also said that Apollo and its subsidiary firm Welspun Infratech (WITL) were in talks for an additional investment of up to Rs.675 crore in WITL in the form of debt, equity or a combination of the two.
"The end use of the funds in WITL will be project specific and the form of such investments is being actively reviewed and considered," the Indian firm said in a statement.
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