Singapore's sovereign wealth fund GIC has raised its holding in public listed Mumbai IT park firm Nirlon Ltd to 63.92 per cent by acquiring more shares in the open offer for Rs 568.32 crore ($90 million).
This completes a rare control-style deal for a sovereign wealth fund in India.
GIC had previously struck a deal to buy up to 39.2 per cent stake in the company last December. This was conditional upon the acceptance ratio in the open offer.
It had made an open offer to buy 28.4 per cent stake from the public and said if it is able to garner over 21.7 per cent stake through this route, it would buy only 5 per cent stake from the promoters for Rs 100 crore besides 29 per cent stake from two institutional investors for Rs 584 crore at Rs 222 a share each.
However, if it fell short of the 21.79 per cent stake mark in the open offer it was to buy 10 per cent from the promoters for Rs 200 crore and was to pick shares from the institutional investors at Rs 175 each shelling out Rs 460 crore for their stake.
The open offer saw full participation, which led GIC to buy around 34 per cent as per the negotiated transaction involving the promoters and some more shares from others for around Rs 710 crore.
The total deal value now stands at around Rs 1,278 crore or a little over $200 million, as per VCCircle estimates.
An email written to the spokesperson of GIC did not elicit any response.
The deal values Nirlon at Rs 2,000 crore ($316 million). The company had ended the financial year FY14 with revenues of Rs 201.5 crore with net profit of Rs 31.6 crore. As of September 30, 2014, it had total assets worth Rs 2,628 crore.
Nirlon Ltd which was originally a nylon textile yarn and conveyor belt maker had turned sick in the 80s and had been moving out of manufacturing business and eventually turned into a real estate owner. Its realty assets were essentially surplus land previously housing its manufacturing units.
Currently, it owns Nirlon Knowledge Park (NKP), a professionally planned, large‐scale, information technology office park located in Mumbai. NKP comprises seven blocks and is spread across a total construction area of 3.3 million sq ft. It is located along the Western Express highway in Goregaon and is just 7 km from the airport and 13 km from Bandra Kurla Complex, the emerging Central Business District of Mumbai. Owing to its strategic location, it is substantially let out, with a strong base of international information technology and financial services companies.
Kotak Mahindra Capital and HSBC Securities were the joint managers to the open offer. Amarchand & Mangaldas & Suresh A. Shroff & Co. was the legal adviser to GIC in the transaction.
GIC has been one of the most active sovereign funds in India and lately has been particularly aggressive in betting on the real estate sector in the country.
In September last year, it inked a deal with Bangalore-based Brigade Group to jointly invest up to Rs 1,500 crore ($247 million) in residential developments in select cities of South India. The JV aims to acquire land for residential and mixed use developments in cities reporting strong secular demand for high quality residential units.
Last year, it also inked a joint venture agreement with Gurgaon-based developer Vatika Goup to develop two residential projects in Delhi-NCR.
GIC, like many other peers, has also backed various public listed firms in India but this would be the first instance of a sovereign fund picking a large stake and possibly a controlling equity holding in a listed firm in the country.
Temasek, another state investment firm of Singapore, recently bought out Silicon Valley Bank's Indian venture debt arm.
Besides real estate, GIC has also been active investor in internet companies in India lately. Last year, it backed Flipkart and has invested in cab aggregator Ola and classifieds venture Sulekha.
(Edited by Joby Puthuparampil Johnson)