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Ms Renuka Ramnath, Managing Director & CEO, ICICI Venture Funds Management Company Ltd, with Mr B.K. Goenka, Vice-Chairman & Managing Director, Welspun India Ltd, at a news conference in Mumbai on Saturday. — Shashi Ashiwal

Mumbai , April 3

ICICI Venture Funds Management Company Ltd on Saturday announced that it had acquired 14.5 per cent equity stake in Welspun India Ltd for a consideration of Rs 75 crore.

Its stake in Welspun will be facilitated by a preferential offer of 79.41 lakh shares aggregating Rs 68.21 crore at a price of Rs 85.90 and 8.82 lakh convertible warrants with an option to convert into equity at the same price anytime within 18 months. ICICI Venture also has the option to occupy two board seats in one of Asia's major terry towel manufacturers.

Simultaneously, the promoters of Welspun India will be issued 28 lakh convertible warrants with an option to convert into equity at the same price anytime within 18 months. The company will get Rs 35 crore through this allotment. The promoters' stake is expected to remain nearly unchanged at 45.39 per cent.

The proceeds of the private placement of equity will go towards the setting up of the Rs 500-crore production facility at Kutch in Gujarat. Welspun's new project is being funded through a combination of sources, Rs 110 crore of equity put in by ICICI Ventures and the promoters, Rs 325 crore in the form of debt from various banks and Rs 65 crore from internal accruals.

Recently, ICICI Emerging Sector, a fund managed by ICICI Venture, had picked up 54 per cent in the Bangalore-based Arvind Brands, the apparel arm of Arvind Mills.

Welspun's new facility, which will start production of terry towels and sheeting by December, will have a capacity to produce 12,000 tonnes and 30 million sheetings per annum, said Mr B.K. Goenka, Vice- Chairman & Managing Director, Welspun India Ltd. This is in addition to the existing capacity of 12,000 tonnes through its existing unit at Vapi in Gujarat. ICICI Venture has made this funding through its newly set up Rs 750-crore India Advantage Fund, said Ms Renuka Ramnath, Managing Director & CEO, ICICI Venture Funds Management. The fund's other investments include Tata Infomedia and PVR multiplex in Hyderabad.

The Rs 350-crore company's clients include international giants such as Walmart, K-Mart, Tommy Hilfiger and Calvin Klein, among others.

More Stories on : Mergers & Acquisitions | Readymade Garments

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