UK-headquartered private equity firm and emerging market specialist Actis has been identified in the Indian media as verging on a deal to acquire an 11 percent stake in Dalmia Cements (Bharat) for $25 million.
Incorporated in 1939, family-owned Dalmia has interests in cement manufacturing and sugar crushing and production, and has announced plans to raise $157 million through a securities issue to fund a proposed expansion.
Dalmia’s vice-president Puneet Dalmia confirmed in an interview with PEO that the company is in talks with Actis but declined to elaborate on details as the board and shareholders have yet to approve the transaction.
Dalmia also said that Actis isn’t the only private equity firm the cement maker has been in talks with. In addition to private equity providers, Dalmia has been exploring funding options with foreign institutional investors as well as domestic mutual funds.
Last year, the company announced a plan to restructure itself to separate its two business streams – sugar and cement. Dalmia declined to elaborate on whether current talks with Actis pertain to an investment confined to its cement business, or both businesses.
If talks between Actis and Dalmia lead to a deal, it will mark Actis’ first investment in India’s cement sector, an area that is commanding greater attention as increasing investment activity in real estate and infrastructure have been fuelling its growth.
Actis has raised $475 million for investment in South Asia through two vehicles, India Fund 2 and South Asia Fund 2, according to its website. The India fund targets globally competitive manufacturing companies, scalable service businesses and companies with strong domestic share, and will provide financing for control and shared control deals and management buyouts, as well as expansion capital. The firm has three offices in India – Mumbai, Delhi and Bangalore, as well as an office in Karachi, Pakistan.
Actis’s most recent investments in India were a $12 million commitment to heat exchanger manufacturer Tema India, and an $18 million deal in Avtec, a new company created to take over the auto component business of Hindustan Motors.