PE, hedge funds take 10% in Argentum

Leading private equity and hedge funds D E Shaw, Rand Corporation of South Africa-promoted proprietary fund Satwa based in Hong Kong and Infrastructure Leasing and Financial Services Ltd (IL&FS) have collectively bought 10 per cent in Argentum Motors.

Argentum Motors is a company floated by B V R Subbu, former president of Hyundai Motors India, Ajay Singh, promoter of budget airline Spicejet, and Ashish Deora, who runs a broadband company.

The company took over the Daewoo Motors India factory near Delhi, which shut shop four years ago, for Rs 800 crore and is planning to set up one of the country's largest auto ancillary units and function as a third-party manufacturer for auto companies.

The three funds have collectively forked out Rs 200 crore for the 10 per cent stake and have also provided the company a loan worth Rs 100 crore.

Confirming the development Singh said: "The three promoters will eventually hold around 12 per cent in the company after the debt is converted into equity."

Singh added that the company is already in talks with manufacturers for long- term contracts.

The company is also looking for a fresh investment of Rs 500 crore to upgrade the facility and might look at more equity investors to finance the project.

"At the moment our focus is to work for international auto companies but we might consider domestic players looking for outsourcing later," Singh said.

Argentum has acquired an engine and transmission plant with a capacity of 40,000 annually, a press factory with a capacity to service 200,000 cars, an aluminum die casting unit to handle 17,500 tonnes of castings, a 40 Mw plant, plastic shop, an assembly line to make 250,000 cars annually (and a research and development centre plus land for development.