ICICI Venture back in fray to fund Basell bid

ICICI Venture is back in the fray to underwrite the bid being made by The Chatterjee Group (TCG), Access Industries and Haldia Petrochemicals Ltd (HPL) consortium for the assets of the global petrochemicals giant Basell.

Sources close to the development confirmed that ICICI Venture had revised its stand and agreed to take part in Basell deal.

Besides ICICI Venture, ICICI Bank was also almost certain to participate in the deal following the new RBI guidelines which allowed banks to invest in overseas acquisitions by Indian companies.

"HPL is going to be the biggest beneficiary of this as ICICI group has agreed to finance the bulk of the HPL's participation in Basell. The finance from the ICICI group could come through a combination of debt and equity.

ICICI Venture would participate in equity where ICICI might chip in with debt for HPLs participation, added sources.

Top officials of HPL and TCG group were now giving final touches to the deal in Mumbai.

This has assumed significance as the TCG group was earlier trying to find a replacement for ICICI Venture in its acquisition bid for the polymer giant Basell Polyolefin.

TCG group officials had tiold Business Standard some weeks ago that a domestic financial institution has been mandated to find a replacement for to ICICI Venture, which had opted out of the consortium.

TCG sources had admitted ICICI Venture had quit the consortium. According to sources, ICICI Venture had backed out because the fund commitment was too big compared to its size.

However, ICICI officials said the institution had backed out because of certain terms and conditions relating to its entry in the consortium. ICICI Venture managed around Rs 1,600 crore through seven funds last year, with its biggest fund having a corpus of less than Rs 1,000 crore. According to sources, HPL is likely to invest around Rs 1,500 crore in Basell's equity.

"HPL and TCG appear to have almost tied up that fund too," sources said. Incidentally, Purnendu Chatterjee of TCG and the Russian billionaire Leonard Blavatnik's Access Industries were the main players in the consortium which clinched the Basell deal at $5.7 billion. Sources said the Basell deal was likely to be closed in four months.

Meanwhile, Infrastructure Leasing and Financial Services (IL&FS) is floating a special purpose vehicle (SPV) with the local companies and Haldia Development Authority (HDA) for building industrial and physical infrastructure in Haldia.

The SPV will be a separate company and will not be under the joint venture outfit of IL&FS and WBIDC floated earlier this week.

Most of the leading companies from Haldia are participating in the SPV.

The state government would like to see Haldia develop into a special economic zone for chemical industries in the country.

The CEO of IL&FS, Pradeep Singh, told Business Standard that Haldia Petrochemicals Ltd (HPL), Exide Industries Ltd (EIL), South Asia Petrochem Ltd (SAPL) of the C K Dhanuka group and Haldia dock complex (HDC) of Kolkata Port Trust (KoPT) have agreed to participate in the equity of the proposed outfit for infrastructure development.

The name of the outfit will be Haldia Integrated Development Agency Ltd (Hidal).

"IL&FS will have 33 per cent stake in the outfit while HDA will have 33 per cent. The rest will be distributed between HPL, EIL, SAPL etc," he said. The initial paid up equity of the company will be closed to Rs 1 crore.