KKR exits Dalmia Cements, buys into holding company

Dalmia Bharat will acquire KKR's stake in Dalmia Cement and concurrently bring in KKR as the parent company's largest institutional shareholder

Dalmia Bharat (DBL) has signed an agreement with KKR, under which the former will acquire the latter’s stake in Dalmia Cement Bharat (DCBL) and bring in KKR as the largest institutional shareholder, with 8.5 per cent holding.

According to a statement by DBL on Friday, following the transaction, DCBL will become a 100 per cent subsidiary of DBL. DBL will make a preferential issue of 7.5 million equity shares to KKR at Rs 825 a share, totalling to Rs 618.75 crore. It paid KKR a cash consideration of Rs 600 crore ($89 million) to acquire the latter’s 15 per cent stake in DCBL. KKR had paid Rs 500 crore in September 2010 to pick up the 15 per cent.

Sanjay Nayar, chief executive of KKR India, said, “We are proud of our association with Dalmia Bharat and continue to believe in its long-term growth. We believe the Indian macroeconomic growth and infrastructure story is poised for a significant uptick in the coming years and the consolidation in cement industry is likely to happen. Given our confidence in Dalmia’s strategy and execution capabilities and corporate governance, we will continue to back Dalmia Cement’s growth and will leverage KKR’s global platform to support the company’s vision of being a leader in the Cement sector.”

Puneet Dalmia said the company benefited tremendously from KKR’s global network, strategic expertise and experience in value creation. After the investment by KKR, the company has successfully completed four acquisitions, greenfield expansions and implementation of environmentally sustainable production processes in a cost effective manner. DBL now has presence in south, east, north-east and western markets of India.”

The transaction is subject to regulatory approvals and other customary closing conditions.

Dalmia Bharat Limited (DBL) is into cement manufacturing since 1939. With an expanding India footprint, the company is a category leader in all kinds of cement including super- specialty cements used for oil well, railway sleepers and air strips. Dalmia Bharat Group has a strong foothold in southern and eastern India (including north east India). The Company continues to produce best quality cement at lowest cost; maximizing efficiencies and observing high thresholds of sustainability. The group with current capacity of 25 million tonnes, is one of the largest in the Indian cement industry.

KKR, a leading global investment firm, manages investment across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR's investments may include the activities of its sponsored funds.