Dalmia Cement (Bharat) today said it has raised Rs 750 crore from private equity firm Kohlberg Kravis Roberts & Co LP (KKR) for its wholly owned cement subsidiary, which was formed after demerger of the holding company last month.
In March, Dalmia Cement (Bharat) Ltd (DCBL) had announced that it was hiving off its cement, power and refractory businesses to a new entity -- Dalmia Bharat Enterprises Ltd (DBEL) -- as part of its restructuring plan, to pursue aggressive growth. The cement business will come under a new arm, Avnija, which will be under DBEL.
"DCBL and KKR today announced the signing of a definitive agreement under which KKR has agreed to invest up to Rs 750 crore in DCBL's wholly owned, unlisted subsidiary," the leading cement manufacturer said in a statement.
The proceeds will be used for both organic and inorganic growth and de-leveraging purposes by the firm, it added.
As per the restructuring plan, the proposed entity -- DBEL -- would have 100 per cent control over Avnija.
Avnija will operate 9 million tonnes per annum of cement making capacity and will have full control of special purpose vehicle Dalmia Cement Ventures, which plans to have 10 MTPA capacity Greenfield facilities, and will hold 45 per cent in OCL India, which has 5.3-MTPA capacity.
"It (the transaction) will enable us to enhance our capacity and market share through organic as well as inorganic routes, while benefiting from KKR's global network and proven value creation capabilities," Dalmia Cement (Bharat) Managing Director Puneet Dalmia said.
The realignment of businesses last month was done with the objective to create separate pure play entities that could thrive on their own and have flexibility to raise capital, he added.
"While the cement industry by nature is cyclical, this is a long-term investment in a great family business, its management team and in India's economy," KKR India Chief Executive Officer Sanjay Nayar said.
During the time of restructuring the businesses, Dalmia had said that Rs 750 crore was required for part-funding the 10-MTPA Greenfield cement capacity programme, which has an envisaged outlay of Rs 4,500 crore.
"The project will be funded with Rs 3,250 crore debt and the remaining Rs 1,250 crore as equity. We have already put in Rs 250 crore as equity and for the rest Rs 1,000 crore, we are in talks with private equity players to raise up to Rs 750 crore. The rest will come from internal accruals," he had said.
