Nirma raises Rs4,000 crore debt to fund Lafarge India assets deal

According to people familiar with the matter, the money was raised by Nirchem, a special purpose vehicle created by Nirma for the buyout


The diversified Nirma group has presence in soaps, detergents, salt, soda ash, caustic soda, cement and packaging, among others. Photo: Ramesh Pathania/Mint
The diversified Nirma group has presence in soaps, detergents, salt, soda ash, caustic soda, cement and packaging, among others. Photo: Ramesh Pathania/Mint

Mumbai: Gujarat-based soda ash, soap and detergent manufacturing company Nirma Ltd, which in July had agreed to buy the cement business of Lafarge India Pvt. Ltd, on Thursday raised Rs4,000 crore debt to fund the deal, making it the “largest rupee bond sale” for a leveraged buyout.

“The Rs4,000 crore five-year bond sale by Nirma offers a yield of 8.68%, and was oversubscribed 1.5 times. This is the largest rupee bond sale for a leveraged acquisition as also the largest AA-rated debt instrument,” an investment banker with knowledge of the matter, who did not want to be identified, told PTI.

People familiar with the matter said the money was raised by Nirchem, a special purpose vehicle created by Nirma for the buyout.

The Ahmedabad-based company had appointed Barclays, Credit Suisse and IDFC to manage the issue.

Investment bankers who are familiar with the matter said on Thursday the issue has been closed successfully and will be listed on the exchanges. At 8.68% yield for an AA rated company this is good pricing, one of them said.

Nirma could not be contacted immediately for confirmation.

On 11 July, Lafarge-Holcim had announced that it had entered into an agreement to sell its assets in Lafarge India to Nirma for $1.4 billion or about Rs9,400 crore to get the Competition Commission of India’s (CCI) clearance for the deal as part of the global merger.

The agreement, part of the building material major’s 3.5 billion Swiss franc (about $3.6 billion) divestment plan, is crucial for approval from the fair trade regulator CCI for the multi-billion dollar global merger between Lafarge and Holcim that was announced last year.

The diversified Nirma group has presence in soaps, detergents, salt, soda ash, caustic soda, cement and packaging, among others.

It has 12 manufacturing facilities in India and the US, and has a turnover of over Rs7,300 crore.

Lafarge India operates three plants and two grinding stations with a total capacity of around 11 million tonnes per annum (mtpa) in the country. The Swiss giant, with presence in 90 countries, will continue to operate in India through its subsidiaries ACC and Ambuja Cements with a combined capacity of over 60 mtpa.

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