Exim Bank stake in Tata Coffee's SPV

Exim Bank of India has picked up 10 per cent stake in Consolidated Coffee Inc, a special purpose vehicle (SPV) set up by Tata Coffee for acquiring the US-based Eight O 'Clock Coffee Company.

"We have participated with Tata Coffee for acquisition of US-based coffee company. We have taken 10 per cent equity stake for $5 million," T C Ventak Subramanian, chairman and MD, Exim Bank, said.

Tata Coffee acquired Eight O 'Clock brand recently for $220 million and hoped to close the deal in a week to complete the formalities.

"We have tied up with Exim Bank for 10 per cent of the equity of Consolidated Coffee Inc. We will arrange the rest of the capital, but we are yet to finalise the source of the funds," MD Kumar, vice-president (finance), Tata Coffee, said.

Tata Coffee over next three to four months would raise Rs 250 crore through rights offer of partly convertible debentures to part-finance the investments for acquisition and capital expenditure for new capacities.

Tata Coffee aims to capture a larger share of the world's fastest growing instant coffee markets "" Russia and Ukraine with the help of the Eight O 'Clock brand.

Russia's instant coffee consumption was 60,000-70,000 tonne per annum and growing by 14 per cent annually. Tata Coffee exports around 5,000 tonne of coffee.

The company is setting up a new freeze-dried coffee plant at Tamil Nadu for the export market. The company has also forged a joint venture with Beeyu Overseas for marketing coffee in Russia and CIS countries.

"Third-party labels are not where our future lies. The intent is to move away from this and work on our own labels. Eight O 'Clock acquisition will help us a lot in doing so," Kumar had said earlier. Tatas plan to launch the US brand in Russia and Ukraine in the near future.

Meanwhile, Subramanian said the bank would continue to assist Indian companies in takeovers and acquisitions in the overseas market.

"We usually take equity exposure for a maximum of five years and sell our stake at a pre-determined price. We have also participated in takeover of a Romanian soda ash company by the Gujurat Heavy Chemical," Subramanian said.