The Hindu Business Line : 3i picks up stake in ITL, ICML

Acquisition moves 3i acquired its equity stake through a combination of sale by promoters and fresh issue. This is the second major transaction here for 3i after it invested $45.5 million (about Rs 197 crore) in media outfit Nimbus Communications in August 2005.

Mumbai , April 5

European private equity group, 3i has acquired 10 per cent stake in International Tractors Ltd (ITL) and International Cars & Motors Ltd (ICML), both unlisted companies belonging to the Sonalika Group.

While separate figures were not disclosed, Mr Anil Ahuja, Managing Partner and Co-Head (Asia), 3i, said that the bulk of the Rs 225-300 crore spent was for the stake at ITL. ICML was recently in the news for unveiling the Rhino — a multi-utility vehicle similar in appearance to the Toyota Qualis — and a 20 per cent equity stake offloaded to Citigroup.

3i acquired its equity stake through a combination of sale by promoters and fresh issue. ITL's promoters had hinted about the move in January.

Second transaction

This is the second major transaction here for 3i after it invested $45.5 million (about Rs 197 crore) in media outfit Nimbus Communications in August 2005. "We are looking for growth," Mr Ahuja said. On the Sonalika chapter, he said that 3i saw good potential in the automobile sector both from the perspective of India as a market and as an export base.

"ITL is one of the lowest cost manufacturers of tractors," he said. In October 2005, Japanese tractor manufacturer Yanmar had struck a strategic relationship, picking up 12 per cent equity in ITL for approximately Rs 200 crore. Citigroup also owns 10 per cent equity stake in ITL. What makes tractors further attractive for investors is that it is a short hop from that rugged machine to basic construction equipments and a lot of other versatile applications.

Among other prominent instances of private equity funds buying into the domestic tractor industry, Actis holds 25 per cent equity in Punjab Tactors.

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