Mumbai: Homegrown private equity fund True North on Tuesday said it will acquire a 75% stake in Shree Digvijay Cement Co. Ltd from Brazil-based Votorantim Cimentos, one of the largest global cement producers in terms of annual installed capacity. True North has made an open offer to acquire a 25.1% stake held by public shareholders for ₹ 23.33 apiece, aggregating to ₹ 83 crore, according to a stock exchange filing by Shree Digvijay Cement.
Shree Digvijay Cement was set up in 1944. In 2012, Cimentos de Portugal, a Portuguese cement company and the then promoter of the Gujarat-based company, had transferred its stake to Votorantim as part of its global restructuring strategy.
“Votorantim Cimentos has contributed significantly to the strategic initiatives taken at Shree Digvijay Cement over the last few years. This has strengthened its competitive positioning and has greatly improved its operating and financial performance. We are very excited about this opportunity, with fresh investment and new thinking we can create a lot of value for all," said Srikrishna Dwaram, partner, True North.
Shree Digvijay Cement manufactures oil well cement and sulphate resisting portland cement at its plant in Jamnagar. It has a production capacity of 1.20 million tonnes per annum and employs about 300 people. For the financial year ended 31 March 2018, Shree Digvijay Cement reported net profit of ₹ 13 crore on revenues of ₹ 424.17 crore. In 2016-17, it had made losses of ₹ 14 crore on revenues of ₹ 319 crore.
On Tuesday, its shares fell 6.41% to ₹ 23.35 apiece on the BSE while the benchmark Sensex rose 0.95% to 35,144.49 points.
“True North is one of India’s leading private equity firms. We are confident that the firm will add great value by virtue of being not just a mere investor, but as a true business partner, leveraging the already existing strengths at Shree Digvijay Cement," said Jorge Wagner, chief executive officer of Votorantim Cimentos (Europe, Africa, Asia).
The deal will mark Votorantim Cimentos’ exit from the Indian market.
The deal also marks True North’s second buyout deal in as many months. Mint reported on 1 October that it had acquired a 75% stake in Sesa Hair Oil, owned by Ban Labs, for about ₹ 700 crore. Earlier this year, True North had tied up with a domestic cement maker to make a bid for Binani Cement Ltd, which was put on the block by its lenders under the insolvency and bankruptcy code.
The Shree Digvijay investment will be True North’s third in the construction space. It currently owns and manages RDC Concrete (India) Pvt. Ltd, which makes ready-mix concrete, and Robo Silicon Pvt. Ltd, which makes construction aggregates, such as sand and gravel.
In September, True North managing partner Vishal Nevatia had said that the firm raised $600 million for the first close of its sixth fund and expects to hit the final close of around $900 million by December-end. Along with co-investment commitments, the fund will have dry powder of close to $1.5 billion, Nevatia said. The firm collectively manages $3 billion of assets from its six funds. Its portfolio companies include taxi aggregator Meru, financier Magma Fincorp, and broadband provider ACT Fibernet.