The Hindu Business Line : Citigroup arm picks up stake in Abhishek Industries

FOREIGN investors are increasingly picking up stakes in Indian textiles players because of the huge export potential following the end of trade quotas late last year.

A private equity arm of Citgroup has picked up a 7-per cent equity in Ludhiana-based terry towel manufacturer Abhishek Industries Ltd through a secondary market transaction valued at around Rs 45 crore.

This comes close on the heels of Temasek, the Singapore-based private equity fund, buying a 14.01-per cent stake in another terry towel major Welspun India for close to Rs 140 crore through a preferential allotment.

The Citigroup-Abhishek Industries deal was struck on Monday at Rs 33 a share and the deal size is put at around $11 million (Rs 45 crore).

Abhishek Industries, a big time supplier of terry towels to leading US retailers including Walmart and JC Penney, reported sales worth Rs 540 crore during the last fiscal, with over 80 per cent of its sales coming from exports.

"An FII has picked up stake in the company. I would not be in a position to comment on which institution has acquired stake," Mr Rajinder Gupta, Managing Director of Abhishek Industries Ltd, said.

Talking to Business Line, Mr Amrish Baliga, Vice-President, ICICI Securities (private equity), said, "It is a uniquely structured deal that creates a win-win situation for both the fund and the company. Citi will add significant brand equity to a fast growing company that has considerable presence in the US markets."

ICICI Securities was the sole adviser to the transaction.

The deal saw Madhuraj Foundation, promoters of Abhishek Industries, offload around 1.36 crore shares - picked up by CBC Bahrain Equity Fund, a Citi arm. Following the deal, the foreign equity holding, that was at 4.29 per cent, goes up to 11.3 per cent.

In case of the Welspun-Temasek deal, the transaction worth Rs 140 crore, had Welspun India diluting a 14-per cent stake in favour of the private equity fund, through a combination of equity shares and convertible warrants.

Prior to this deal, ICICI had picked up around 11.37 per cent stake in the company for Rs 75 crore.

The funds will be primarily used to finance the company's inorganic growth plans and expansion of weaving capacities. The company also plans to use a part of the funds for retail initiatives, brand development and distribution alliances in the domestic market.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
MF industry hails Budget

Karvy, Reliance MF on knowledge yatra

Citigroup arm picks up stake in Abhishek Industries

Bull-run arrested

ITC jumps on tax saving hopes

CCL Products hot on growth prospects

Short-term trend reversal in ITC, Hindalco likely

`A boost to derivative market'

SEBI overburdened with disciplinary cases

FMCG, capital goods, consumer durables gain