Mumbai, Aug. 28: Private equity fund Blackstone is picking up a stake in Nagarjuna Construction Company for Rs 615 crore ($150 million), its second big-ticket deal in less than 10 days.
Last weekp, the US-based Blackstone had scooped up 50.1 per cent of garment company Gokaldas Exports.
Under the deal, Nagarjuna will issue preferential shares and warrants to Blackstone.
The company informed stock exchanges that its board today decided to issue 20,246,900 equity shares of Rs 2 each at a premium of Rs 200.50 and 9,111,111 warrants at Rs 225 per warrant to Blackstone.
It said each warrant would be converted into an equity share at Rs 225 per share.
Nagarjuna, however, did not reveal the extent of Blackstone shareholding. Three Mauritius-based Blackstone entities are picking up the stake in Nagarjuna. The company’s share today closed at Rs 197.55 on the BSE.
The proceeds from the sale will be used to fund new infrastructure projects both by the company and its associates.
The money will also meet working capital and other long-term funding needs of Nagarjuna, which will seek shareholders’ approval for the sale at an extraordinary general meeting on September 24.
Nagarjuna later said in a statement that Blackstone would have representation on its board. Kotak Investment Banking advised Blackstone, while Nagarjuna consulted SSKI.
Akhil Gupta, chairman and managing director of Blackstone Advisors India Private Ltd, said, “We believe that planned infrastructure expenditure, economic growth and urbanisation will drive long-term growth in India’s construction sector.”
Nagarjuna Construction managing director A Ranga Raju said, “We welcome Blackstone as a long-term partner. With its global reach and pro-active approach, Blackstone brings immense value to the company.”
Nagarjuna had orders of Rs 7,455 crore till June 30, from clients in real estate, roads, electricity, irrigation, power and oil and gas.
The company is also a player in real estate. Along with its subsidiaries, it has a land bank of 530 acres in Bangalore, Hyderabad, Chennai, Visakhapatnam and Kochi.
For the quarter ended June, Nagarjuna reported a 6.1 per cent fall in net profit to Rs 36 crore from Rs 38.4 crore in the previous year.
Blackstone is gearing up for an open offer for another 20 per cent in Gokaldas that will involve an outlay of $165 million or Rs 682 crore.