ICSA may sell 14% to Goldman Sachs

Hyderabad-based ICSA (India) is likely to sell 14 per cent equity to global investment bank Goldman Sachs, which will infuse $52 million into the company, part of it for the equity and the rest in foreign currency convertible bonds.

At the same time, ICSA, an embedded technology and electrical infrastructure solutions provider, has decided not to sell equity to Citigroup Venture Capital International Growth Partnership Mauritius (CVC).

The company has cited non-fulfilment of regulatory and technical conditions for not going ahead with CVC. The venture capital firm had a 45-day due diligence period, but could not complete the proceedings in time, sources close to the development told Business Standard.

CVC had sought an extension, but failed to get it from the market regulator Sebi. ICSA was also not in favour of extending the deadline.

When contacted, Citigroup Investments India Managing Director Ajay Relan confirmed the development. "We couldn't meet the stipulated 45-day timeline and the due diligence procedure got delayed. It was just unfortunate," he added.

Meanwhile, Goldman Sachs is believed to have evinced interest in acquiring the 14 per cent stake at higher amount.

According to sources, the deal with CVC was at around Rs 950 per share, while Goldman Sachs' offer is at Rs 1,250 per share. This is in addition to Goldman Sachs' commitment of $22 million in ICSA through foreign currency convertible bonds (FCCBs).

Goldman Sachs will now hold 14 per cent stake in ICSA, and FCCBs to the tune of $22 million. ICSA is convening a board meeting on March 17 to consider Goldman Sachs offer. When contacted, ICSA officials declined to comment.

ICSA was earlier promised investments of $52 million jointly by CVC and Goldman Sachs. CVC had promised to invest $22 million in return for 14 per cent stake, while Goldman Sachs' commitment was to the tune of $30 million. Goldman Sachs' investment was to be made through Foreign Currency Convertible Bonds (FCCBs), and not through equity.

At present, foreign institutional investment holding in ICSA stands at 25.37 per cent. The company was looking at the investments to meet its working capital requirements, for inorganic investments and R&D related expenses.

ICSA is into developing of technology solutions for power, oil, water and gas sectors. The solutions help in identifying transmission and distribution (T&D) losses and monitor power and oil consumption using the GSM network. The company is listed on National Stock Exchange in September and at present has an order book of around Rs 1,000 crore.