Chennai-based infrastructure construction service provider Shriram EPC today announced that it has agreed to acquire 55 per cent stake in engineering consulting firm Blackstone Group Technologies (BGT) for an undisclosed sum.
The acquisition will be funded through internal accruals with SEPC acquiring, in part, equity from existing promoters of BGT and also through the allotment of new equity.
The agreement also provides the acquirer the right to buy the balance stake in the company after three years. The present tranche of 55 per cent has been sold by the company founder promoter Ashref Hashim, a US-based non-resident Indian.
Shriram EPC’s investor relations cell said that a 5 per cent stake will however be set aside for the BGT’s director S Egbal, who is in-charge of the routine operations of the company. Shriram EPC proposes to keep BGT as subsidiary company and not merge it with itself, said a company executive. The acquired company had reported a turnover of Rs 12 crore last financial year and has 250 employees. Shriram EPC has 510 people on its rolls as a standalone company and 703 employees including its associate and subsidiary company. The company went public in February 2008 and this is the first acquisition by the company.
For the year ended March 31, 2008, Shriram EPC had reported income from operations of Rs 699 crore and net profit of Rs 35 crore.
In a media release, T Shivaraman, Managing Director and CEO of Shriram EPC, said, “This acquisition will help us to consolidate our position as a leading provider of engineering services and provide synergies across our business lines of process and metallurgy, biomass power plants and pipe rehabilitation. BGT brings with it a strong team of highly skilled personnel with a wealth of experience and know-how in their business which will be complementary to our existing service offerings. As this helps us to broaden our service capabilities, we will be able to aim for a higher share of wallet from our existing customer base as well as leverage on BGT’s customer relationships for new business.”
The acquisition of BGT is expected to enhance Shriram EPC’s manpower resources and provide skill sets in design and high value engineering that will strengthen its capabilities especially in the area involving civil and structural engineering. These capabilities are a critical requirement for projects it currently executing and are complementary to its current offerings, the release said. SEPC was earlier outsourcing these requirements, and the certainty of supply and the quality control that can now be exercised by SEPC will enable it to bid for larger projects.
BGT has offices in Chennai and Chicago and has an established client base with nearly 70 per cent of business coming from repeat clients.
