Mumbai: Sweden’s Saab AB will invest Rs.201 crore (250 million Swedish kronors) for a stake in Pipavav Defence and Offshore Engineering Co. Ltd, the first strategic investment made by a global defence company in an Indian shipbuilder focused on defence production.
Pipavav Defence has signed a stock subscription-cum-shareholders agreement with Saab for the sale of 24.5 million shares at a price of Rs.82 apiece. The transaction is at a 7.75% premium to the average of Pipavav Defence’s six-month weekly closing price, the Mumbai-based company said in a stock exchange filing on Friday.
Saab will own 3.5% of Pipavav Defence after the transaction is completed and will have an option to increase it to 10%, according to a senior executive of the company, who declined to be named.
“Saab global chief executive officer Haken Boshcke will get a seat on Pipavav Defence board through this deal,” he said, adding that the company had secured the foreign investment promotion board’s approval for the transaction. Mint could not immediately reach Saab for comment.
The SAAB-Pipavav Defence partnership will focus on exporting military hardware, the statement said.
Nikhil Gandhi, chairman of Pipavav Defence, said the deal will help the company export submarines and frigates to other countries and Saab will used Pipavav Defence’s yard as a hub in India.
“This deal will provide proprietary technology to build missile systems, underwater equipment, air defence equipment and other advance defence systems,” Gandhi said.
He declined to disclose more details.