RP-Sanjiv Goenka Group’s PCBL Ltd has agreed to acquire 100% stake in Pune-based Aquapharm Chemicals Pvt. Ltd for ₹3,800 crore (about $456 million), beating rivals Dorf Ketal and Tata Chemicals Ltd.
The acquisition will give PCBL, among the largest manufacturers of carbon black material in India, a crucial foothold in the specialty segments of water treatment chemicals and oil and gas chemicals.
PCBL, earlier known as Phillips Carbon Black Ltd, expects to finance the deal through a mix of internal accruals and external fundraising, the company told stock exchanges after the share-purchase agreement was signed on 28 November. The acquisition is expected to be completed in two to three months.
PCBL will acquire Aquapharm shares from the company’s founders Vimal and Dharmesh Mangwani and Nitin Desai, of Desai Brothers Ltd, the owners of Mother’s Recipe pickles brand.
Mint reported the impending sale of Aquapharm first on 2 April 2023, after the company hired investment bank Stifel to arrange the sale.
Mint also identified PCBL as one of the suitors in a 17 October report that said Dorf Ketal was raising ₹3,800 crore in non-convertible debentures to fund the acquisition.
PCBL reported net revenue of ₹5,873.9 crore for 2022-23, and a profit after tax of ₹444.09 crore.
A major portion of PCBL’s revenue comes from the sale of carbon black to tyre manufacturers, CareEdge Ratings said in a 14 September report.
“The demand for specialty black has also been witnessing an increase. The supply disruptions from China and Russia have benefitted the domestic manufacturers,” CareEdge said in another report dated 21 September.
The acquisition is expected to improve PCBL’s revenue diversification mix.
According to CareEdge, PCBL’s liquidity is supported by unutilized lines of working capital limit, where average utilization stood at 41% for sanctioned fund-based limits of ₹750 crore in the year to April end.
“Apart from the secured working capital limits of ₹3,000 crore, PCBL has access to unsecured limits of ₹1,800 crore at standalone level from various lenders,” it said.
Shares of PCBL fell 2.90% to close at ₹254.30 on BSE on Tuesday, while the benchmark Sensex closed 0.31% higher. The transaction was announced after market hours.
PCBL last raised ₹400 crore through a qualified institutional placement in October 2021.
Aquapharm reported sales of ₹2,008.8 crore in 2022-23, PCBL said. It makes a variety of specialty chemicals used in water treatment (desalination and reverse osmosis), detergents and oil fields.
Stifel was the exclusive financial adviser to Aquapharm’s shareholders. Khaitan & Co. was the legal adviser to PCBL, along with EY, which acted as financial and tax diligence adviser. Dentons Link Legal served as legal adviser to Aquapharm’s shareholders and Deloitte as the due diligence provider.
According to a March 2022 Crisil report, Aquapharm derives a major portion of its revenue from exports to Europe, North America and other regions. “In fiscal 2018, the company acquired US-based Aquapharm Chemicals Llc, which has a facility to manufacture specialty chemicals mainly for the oil and gas sector,” the Crisil report added.