Investment firm Fairfax India will acquire 30 per cent stake in Chennai-based Sanmar Chemicals Group for an investment of USD 300 million (about Rs 2,000 crore).
Fairfax, the Canadian billionaire Prem Watsa-owned group, will make this investment through equity and fixed income securities.
Sanmar Chemicals is one of the leading PVC manufacturers in India with an installed annual capacity of around 3 lakh tonnes.
"Fairfax India Holdings Corporation announces, through its wholly-owned subsidiaries, it has agreed to invest USD 300 million into the Sanmar Chemicals Group," the company said in statement.
"As a result of this investment, Fairfax India will acquire a 30 per cent equity ownership in Sanmar and also generate a fixed return on its investment," it added.
Fairfax India will invest in two tranches. In the first round, it will invest USD 250 million, post completion of the deal.
The company said it cannot invest more than 25 per cent in any single investment deal, and therefore it will fund an initial tranche of USD 250 million upon closing of the transaction.
The second tranche of USD 50 million will be completed within 90 days thereafter by Fairfax Financial Holdings Ltd or another investor.
The first tranche is expected to be completed in the second quarter of 2016 upon the satisfaction of certain conditions precedent, including the establishment of a term loan facility for USD 80 million between TCI Sanmar Chemicals Egypt, the Egyptian subsidiary of Sanmar, and its lenders, the statement said.
"Sanmar, under the leadership of N Sankar, one of the pioneers of the Indian PVC industry, and his son, Vijay Sankar, and their highly experienced management team, is well placed to cater to the growing demand for PVC in the emerging markets of India, the Middle East and Europe," Prem Watsa, Chairman of Fairfax India, said.
Welcoming the investment, Sanmar group Chairman N Sankar, said, "We are excited at having Fairfax as a long-term partner. Sanmar will benefit by having a financially strong shareholder with a global footprint. We look forward to the expansion of our capacities in Egypt and India creating value for all stakeholders."
The Sanmar is in the process of expanding its PVC capacity in Egypt from 2 lakh tonnes per annum to 4 lakh tonnes.
Once the expansion programme is completed, Sanmar will have a total PVC capacity of over 7 lakh tonnes per annum, making it one of the largest PVC companies in the world.
In addition, Sanmar also manufactures caustic soda, chloromethanes, refrigerant gases, industrial salt and speciality chemical intermediates.
