Reliance Infrastructure, a part of industrialist Anil Ambani's group, on Wednesday said it has acquired 18-percent stake in Pipavav Defence and Offshore Engineering, that has expertise in naval vessels among other niche capabilities, for Rs.819 crore. This takes Pipavav Defence's valuation to well over Rs.4,500 crore.
The 18-percent stake has been acquired at Rs.63 per share from the promoters of Pipavav Defence and an offer has also been made to acquire another 26-percent stake from the public at Rs.66 per share, based on regulatory norms, the company said.
Reliance Group will also acquire such number of additional equity shares of the company, at the same price of Rs.63 per share, as is required to ensure that its shareholding is not less than 25.1 percent of the target company, after all acquisitions.
"This is a unique opportunity for the Reliance Group to participate in Prime Minister Narendra Modi's 'Make in India' programme for the high-growth defence sector," Ambani said in a statement.
"We are confident that our strategic investment will create long term value for all stakeholders."
Post the transaction, existing promoters of Pipavav Defence will continue to retain a minority stake with two non-executive seats on its board.
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The transaction is subject to some unspecified conditions, besides regulatory and other statutory approvals.
Ambani will chair the acquired company.
"I look forward to supporting Reliance to realise the goal of creating India's foremost defence company, with an emphasis on the 'Make in India' programme initiated by the honourable prime minister of India," said Nikhil Gandhi, founder-chairman of Pipavav Defence, adding this was the vision his group had set out 10 years ago.
Co-promoter and vice chairman Bhavesh Gandh said he expected Reliance's strategic investment to accelerate the company's progress towards meeting the needs of India and creating sustainable social value in the community.
In the middle of last month, Ambani had announced his group's plans for a major foray into the defence equipment manufacturing sector and said three wholly-owned companies had been floated for that purpose -- Reliance Defence Systems, Reliance Defence Technologies and Reliance Defence Aerospace.
"The 'Make in India' initiative of the government provides a perfect landscape for a comprehensive defence industrial base in the country," Ambani had said about the latest foray.
"The Reliance Group is committed to contribute significantly to this initiative," he said.
"We would endeavour to bring world class technologies to India and create skill sets within the country to deliver top end platforms for our armed forces, cut down on import of defence products and create high skill jobs."
The group intended to explore opportunities in all the three wings of the armed forces, notably on the naval platform, air mobility, avionics and network centric warfare, company officials said.
The former India chief of Lockheed Martin, Rajesh Dhingra, was also named to lead this initiative.
Pipavav Defence is an integrated defence production, ship building and offshore infrastructure company and the first in the Indian private sector to get the license and contracts to build frontline warships for the Indian Navy, a Reliance statement said.
It has one of the world's largest Infrastructure facilities -- spread over 841 acres of land on the west coast of India in Gujarat at the Gulf of Cambay, with 210 acres of fully-developed waterfront land and another 250 acres for shipbuilding.
It counts as partners some of the best defence companies in the world such as SAAB Technology of Sweden, DCNS of France, Sembcorp Marine of Singapore, JSC Zvyozdochka and Rosoboron of Russia, Sagem of Europe, and Atlaselektronik of Germany.