Plan to reduce debt burden by roping in investors at subsidiaries.
Cranes Software, the Rs 500-crore publicly held software products firm in the engineering and analytics space, is set to raise Rs 300 crore by roping in strategic or private equity investors at two of its three subsidiaries. Cranes is embarking on this step in an effort to ease its Rs 800-crore debt burden which is currently leveraged at around four times.
The Bangalore-based firm is looking at raising around Rs 300 crore by offloading 26-49 per cent in two of its three subsidiaries – Engineering, Analytics and Technology which account for Rs 150 crore, Rs 125 crore and Rs 225 crore, respectively. Sources indicate that engineering and technology divisions have got at least three investment proposals.
Investment banking sources indicated that Cranes is looking at a valuation of at least two times the topline of these divisions from which the company could raise close to Rs 300 crore. Asif Khader, MD, Cranes Software, declined to comment on what he called forward-looking statements.
Cranes’ Rs 800 crore debt includes Rs 250 crore of FCCBs, on which the company has a discounted buyback option. Excluding this, the debt will be around Rs 550 crore of which Rs 400 crore is long-term debt. Cranes Software is understood to be settling the Rs 150 crore short-term debt from the fresh infusion of Rs 300 crore within the next four months, resulting in the much needed breathing space for the company, sources added.
Since 1991, Cranes has been effecting a expansion strategy of acquiring software products, adding value and expanding its available market. It has over the past six years spent close to Rs 500 crore to acquire 16 companies or product IPs. It invested Rs 800 crore accrued from profits in enhancing and expanding the software products it acquired.
Cranes Software, which counts General Motors, Eli Lilly, Ashok Leyland and Tata Group in its client roster, posted net profit after tax of Rs 124 crore in fiscal 2009, a healthy 24 per cent net profit percentage and employs around 1,400 people.