US private-equity giant KKR & Co would invest Rs 300 crore in Walchand Nagar Industries, one of India’s oldest business groups, in a structured financing deal that would help the Mumbai-based conglomerate realign its businesses and repay some of its term loans.
The transaction, approved by KKR’s investment committee, will be signed in the coming week, multiple sources with direct knowledge of the matter told ET.
The capital infusion would be yet another credit deal from the New York-based private equity giant that has demonstrated an aggressive credit strategy in India, where it has deployed around $4 billion over the past seven years. The deal will help WalchandBSE -1.80 % retire some of its bank loans, besides providing capital to drive growth. The funds would be mainly used for expansion of its defence business, as the group wants to strengthen its niche expertise, the sources said.
When contacted, KKR and Walchand declined to comment.
Set up in 1908 by Walchand Hirachand Doshi, this Mumbai-based firm manufactures heavy engineeringBSE -0.69 % products and machinery and provides EPC and turnkey project services. The company has strong presence in defence, aerospace, and nuclear industries. It supplies infrastructure and facilities for India’s next-generation Akash Missile system and the Inter-Continental Ballistic Missile programmes, including the Agni and Prithvi missile systems. The company was also a major core component and systems supplier for India’s Moon Mission, Chandrayaan. The company works closely with the Defence Research and Development Organisation (DRDO) and Indian Space Research Organisation, its Web site showed.
“The strategy is to realign the business and sharpening the focus on defence production. The partnership with KKR will also help the firm for its global exposure,” one of the sources said. “For KKR, this would be the beginning of a long-term partnership with Walchand. Eventually, it will get into the board of the company and make follow-on investments as well,” he added.
KKR has been one of the most aggressive private equity firms in India over the past several years. Although known for its multi-billion buyout bets globally, the asset manager’s India strategy has been predominantly into partnership deals and it has developed in India a niche structured-credit platform that KKR intends to replicate across Asia.
The US asset manager has invested approximately $2.5 billion in 12 private equity transactions since 2006, and has extended close to $4 billion of structured financing to business groups in India through its corporate credit business, besides investing approximately $200 million from its special situations business and $ 900 million through its real estate lending business.
India plans to spend $250 billion by 2025 on weapon systems and equipment for modernization and strengthening of its armed forces, the country’s Defence Minister said in March. Walchand, one of the original promoters of state-run Hindustan Aeronautics Ltd, is eyeing a large chunk in this gigantic pie of defence orders.
Source: Economic Times