The Telegraph
Since 1st March, 1999
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Singapore prop for CDC buyout

Calcutta, Aug. 1: The Government of Singapore Investment Corporation is providing 30-40 per cent of the $ 100 million that CDC Capital Partners is investing to acquire substantial holdings in Punjab Tractors and three other firms promoted by it.

Lathe Investments, a 100 per cent owned arm of the Government of Singapore Investment Corporation is “acting in concert” with CDC. The latter — formerly known as Commonwealth Development Corporation — is wholly-owned by the UK government’s Department for International Development.

A spokesperson for CDC in India said: “The Singapore government is funding us in the deals involving Punjab Tractors and the three other businesses promoted by it. It will be providing 30-40 per cent of the $ 100 million that CDC may have to pay.”

Another ally in CDC’s takeover of Punjab Tractors is South Asia Regional Fund, in which the Industrial Development Bank of India (IDBI) holds 9.55 per cent. CDC is the single largest shareholder in South Asia Regional Fund with a 47.74 per cent stake.

However, neither of the associates would be directly investing in the shares of Punjab Tractors or any of the companies promoted by it, CDC clarified. South Asia Regional Fund owns 21.39 lakh shares of Punjab Tractors, representing about 3.5 per cent of the company’ shares. This, it had bought from the market and the custodian of Harshad Mehta’s properties.

CDC has made a cash offer to the shareholders of Punjab Tractors for 20 per cent of the company’s equity at Rs 153 per share. It will have to shell out Rs 186 crore if the offer is fully subscribed.

CDC has made cash bids for 20 per cent stakes in Swaraj Mazda — a joint venture with Mazda and Sumitomo Corporation of Japan, in which Punjab Tractors holds 29.04 per cent — Swaraj Engines and Swaraj Automotives, in which the tractor major holds 33.16 per cent and 24.2 per cent respectively.

CDC will be paying Rs 235.39 crore in all if its offers for the four firms are fully subscribed. CDC paid Rs 218.13 crore to the Punjab government for its 23.49 per cent stake in the company.

On the issue of management control of the three Swaraj firms, the CDC spokesperson said: “We are going to take a call based on the response to our open offers, but will never get into a controversy over running of the businesses.” CDC will be appointing two nominees on the board of Punjab Tractors.

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