Mumbai: India Resurgence Fund, a joint venture between Piramal Enterprises Ltd and Bain Capital Credit, on Monday said it had invested $156 million in the marine chemicals business of Chennai-based Archean Group.
The investment proceeds will be used to repay Archean Chemical’s existing debt, for capital investment to optimize the plant’s output across all product lines, and to provide working capital to grow its market share in India and across major export markets such as Japan, China, the Middle East and Europe.
“We are pleased to partner with the Archean Group, which reiterates our robust outlook on the marine chemicals business," Shantanu Nalavadi, managing director at India Resurgence Fund, said.
“This, coupled with the company’s globally competitive position, will facilitate IndiaRF to work closely with the promoters and the management team, to steer the company towards an accelerated expansion, growth and profitability path," he added.
The fund has invested both through debt and equity, and offered repayment terms such that the initial years’ cash flows are reinvested into growing the business. The capital is to be returned once the turnaround is fully implemented. Mint had first reported in June that the Bain-Piramal fund had made an investment in Archean Chemical Industries Ltd through a structured deal.
Archean Chemical has been struggling to service its debt following the delay in achieving full operating capacity, which resulted in cost overruns and incremental losses and an unfavorable debt repayment schedule.
According to the Archean Chemical, it is the largest producer and exporter of industrial salt and bromine in India. Founded in July 2009, Archean Chemical owns and operates an integrated marine chemicals complex in Kutch, Gujarat. The plant produces sulphate of potash (SOP)- a high end fertiliser, industrial salt and bromine. The integrated complex uses the available brine flowing over marine mineral deposits in the Rann of Kutch.
The chemical manufacturer is part of the Archean Group, which has business interests across building materials, mining and minerals, industrial chemicals and fertilizers, shipping and shipbuilding, oil and gas, and renewable energy.
The India Resurgence Fund invests in distressed assets and special situations in India across sectors barring real estate. According to its website, the fund looks “to invest in businesses that require balance sheet restructuring with a focus on debt restructuring" and fund companies with “strong growth prospects linked to India’s infrastructure and consumption needs".