Mumbai: Maverick investor C. Sivasankaran has completed the first leg of yet another profitable exit, with the Sahara group repaying around Rs1,680 crore to Siva Ventures Ltd even as it has to repay an additional Rs1,120 crore by March if it wants to regain complete control over Aamby Valley Ltd, which has built an eponymous luxury township spread over 10,600 acres an hour’s drive from Mumbai.
Sahara India Commercial Corp. Ltd, a housing subsidiary of the group, owns 51% stake in the project.
The group had sold 49% stake of Aamby Valley City to Siva Ventures in 2007 with an arrangement to buy back the stake in three years at a pre-determined price.
Profitable exit: Siva Ventures’ C. Sivasankaran. India Today
Siva Ventures bought this stake for Rs1,000 crore. In addition to that, it has lent Rs1,200 crore to Aamby Valley.
Going by the arrangement, Sahara needs to pay Rs1,600 crore for the 49% stake and pay interest on the debt apart from the principal amount of Rs1,200 crore. In other words, its total liability is Rs2,800 crore, besides the interest on debt.
Siva Ventures is free to sell its stake in the residential township after March 2010 if the Sahara group does not clear its dues.
Siva Ventures is the investment arm of the Sterling group that invests in a range of activities from wind mills to real estate.
“Sahara has already repaid nearly 60% of the money and will have to repay the remaining amount—Rs1,120 crore by March 2010, according to the agreement,” a Siva Ventures official familiar with the development said. “Sahara has been paying interest for the loan,” the person added but declined to specify the rate of interest. He did not want to be identified as he is not the official spokesperson of the firm.
“We will release the shares once they repay the entire amount,” he said.
According to this person, the group has informed Siva Ventures that it would sell shares to foreign and domestic institutional investors and repay the remaining amount. For this, the group is seeking services of legal firms that advise Siva Ventures for various transactions.
When contacted, Vaidyanathan Srinivasan, director, Siva Ventures, said the company holds 49% stake in Aamby Valley but declined to comment on the transactions—“a private deal between the two unlisted companies”.
Sahara group spokesperson did not respond to an email questionnaire sent last Friday.
The Business Standard on 5 February reported that the Sahara group is set to buy out Sivasankaran from its flagship project Aamby Valley City near Lonavala.
Sivasankaran is known for buying companies cheap and selling them at a high valuation and making money on such deals. He has sold his stake in Aircel Cellular Ltd, India’s sixth largest cellular service provider, to Maxis Communications Bhd of Malaysia and Pratap Reddy of Dr Reddy’s Laboratories Ltd for $1.09 billion (Rs5,014 crore) in 2005 and Barista coffee chain to Luigi Lavazza SpA of Italy in 2007.
Siva Ventures has now 6% stake in Tata Teleservices Ltd, Tata group’s mobile telephony company in which NTT DoCoMo Inc. purchased 26% stake; 100% in Siva Projects Engineering Ltd that builds telecom towers for mobile firms; and owns real estate in Chennai, Pune and the Secheyelles. Siva Ventures has also purchased a 49% stake in Hindoostan Spinning and Weaving Mills Ltd.
The Sahara group has interests in businesses such as finance, entertainment, real estate and media, and publishes a Hindi-language paper that competes in some markets with Hindustan , published by HT Media Ltd, which also publishes Mint .