Kampani to buy stake in Sangam India

Ace deal maker Nimesh Kampani is all set to pick up a minority stake in the Bhilwara-based textiles company Sangam India.

The board of the textiles company has decided to place nearly 5 million convertible warrants on a preferential basis to Kampani and company's promoters. The price of the preferential issue has been fixed at Rs 83.30, in line with the Sebi guidelines. The proposal will be placed before the shareholders at an extra-ordinary general meeting on May 31.

Kampani's investment arm Kampani Financial and the promoters will subscribe to the issue in equal proportion. A back-on-the-envelop calculation suggests that Kampani will have 5.63 per cent stake in the company's enhanced equity capital. The promoters' stake will scale up marginally from the existing 36.03 per cent to 37.35 per cent, post the issue.

The company will get a total of Rs 43.6 crore through the preferential allotment which would be utilized for its expansion plan. Sangam is at various stages of implementing Rs 700-crore expansion plan. Post expansion, Sangam's capacity will increase to 2,11,584 spindles and it will have have 279 of weaving and knitting machines. In 2005-06, Sangam posted net profit of Rs 25 crore on net sales of Rs 350 crore.

Kampani had recently severed his seven-year old relationship with Morgan Stanley. A portion of Rs 1,900 crore""what he received due to the separation""would be utilized to further capitalise his flagship JM Financial's NBFC operations and kickstart new businesses such as institutional securities trading and an asset reconstruction firm.

The pillars identified for JM's growing operations include investment banking; alternative asset classes like private equity and real estate funds; capital market activities like retail broking, institutional equities; and asset management.

Private equity will be one of the strongest focus areas, he had earlier said. JM has raised around $500 million for a private equity and a real estate fund. He will invest in growth-oriented, largely unlisted companies with a size of Rs 500-1,000 crore.