Advanta maiden float to partly fund acquisition

Advanta India, a subsidiary of United Phosphorus, will perhaps be the first instance of a company acquired overseas getting listed on the Indian bourses.

The forthcoming IPO of Advanta India, which came into the UPL fold after the acquisition of Advanta Holdings Netherlands for Rs 556.52 crore in August, would also be the first case of part-financing of an acquisition through the IPO proceeds.

Advanta India was formed after UPL merged the operations of the Netherlands company into a newly floated 100 per cent Indian subsidiary.

As per the draft prospectus filed by Advanta India, one of the objectives of the IPO is to pay up about Rs 255.42 crore due to Bio-Win Corporation, from which United Phosphorus had bought Advanta Netherlands.

United Phosphorus had acquired 100 per cent shares held by Bio-Win Corporation in Advanta Holdings to acquire the businesses of Advanta Netherlands, an international agronomic seed company with operations in India, Australia, Thailand and Argentina.

In India, Advanta is active in the research, production and sales of a range of hybrid cereals and oilseed crops. The company's key crops in the country are rice, sunflower, corn, millet, grain sorghum, forage sorghum and mustard.

"We plan to invest Rs 250 crore in our subsidiary, Advanta Holdings BV. This amount will be utilised by Advanta Holdings for the payment of dues of one our promoter group companies, Bio-Win Corporation, in respect of the acquisition of Advanta Netherlands Holdings B V, which is the holding company of all our subsidiaries, including our operating subsidiaries," the draft document said.

When contacted, a company official in Bangalore said, "We will be investing more in Advanta using the IPO proceeds. The payment of dues is just a part of the proposed use of funds from the IPO proceeds."

Advanta India proposes to issue 50.57 lakh new shares through the IPO, which would result in United Phosphorus' stake coming down to 49.90 per cent from the existing 100 per cent. The company also proposes to do a pre-issue private placement for 16.85 lakh shares to strategic investors.