BNP buys 49.9% in Sundaram arm for Rs 100cr

25th October 2005: Sundaram Finance has signed an agreement with BNP Paribas Asset Management to sell 49.90% equity in its wholly owned asset management company, Sundaram Asset Management Company (SAMC), for Rs 100.38 crore. The deal has valued SAMC at about Rs 201 crore. A Sundaram Finance press release said the joint venture would be named Sundaram BNP Paribas Asset Management Company. The transaction is expected to be completed in the first quarter of 2006 after the relevant regulatory clearances come through.

BNP has agreed to buy SMAC’s equity shares (face value of Rs 10) at a price of about Rs 136 a share. In mid-2002, Sundaram Finance had bought about 39% of SMAC from its erstwhile overseas partner, Newton, at a price of Rs 18 a share. SMAC Managing Director TP Raman said the two deals were not comparable, as they had been arrived at in different circumstances.

BNP will also take a 49.9% stake in Sundaram Finance Trustee Company for Rs 3.46 lakh to meet mutual fund guidelines. The size of funds managed by SAMC stands at about Rs 2,870 crore, up from Rs 800 crore in mid-2002. About 60% of the funds managed are in equity schemes. SMAC’s assets under management received a boost of about Rs 1,000 crore recently through the public offer of two equity schemes.

Even when Sundaram Finance parted ways with Newton, it had indicated that it was open to a tie-up in future. In this case, BNP Paribas had approached Sundaram Finance for a stake in the asset management company. In a Sundaram Finance press release, Gilles Glicenstein, chairman of BNP Paribas Asset Management, said, “We believe that the Indian market is one of the most exciting and rapidly developing markets in the world; it has already shown substantial growth and has potential for much more.”

Reliance Capital to buy 14.81% in Kinetic Engineering Ltd (KEL)

25th October 2005: Reliance Capital Private Equity is set to acquire a 14.81% stake in the Firodia family-controlled Kinetic Engineering Ltd (KEL) for Rs 12.7 crore. The board of KEL today approved the proposed sale of stake in the company.

Reliance Capital Private Equity, a division of Reliance Capital, will subscribe to 715,000 shares in Kinetic Engineering on a preferential basis at Rs 178 per share. In addition, Reliance Capital will subscribe to 600,000 equity warrants of KEL, each convertible into one equity share, at a price of Rs 178 per equity share.

A KEL press release said MicroAge Instruments Pvt Ltd, a promoter group controlled by the Firodia family, will also subscribe to 900,000 equity warrants of Kinetic Engineering, each convertible into one equity share at a price of Rs 178 per share.

Reliance Capital will also subscribe to 1,50,00,000 preference shares of Kinetic Engineering aggregating to an investment of Rs 15 crore. The issue of shares is subject to the approval of shareholders of Kinetic Engineering.

Sulajja Firodia Motwani, joint managing director, Kinetic Engineering said, “The investment is aimed at enhancing our focus on manufacturing of automotive components for Indian and global automotive companies.”

Ambit Corporate Finance Pte Ltd acted as the exclusive financial advisor to this transaction. Ambit Corporate Finance will also subscribe to 100,000 equity warrants of Kinetic Engineering, each convertible into one equity share at a price of Rs 178 per share. Ambit will also subscribe to 50,500 equity shares at a price of Rs 178 per share on preferential basis.

Gujarat NRE Coke Ltd buys 49% in Aussie firm Plouton Resources Pty Ltd

31st October 2005: Gujarat NRE Coke Ltd, an Indian metallurgical coke producer, said on Monday it had bought 49% of Australian mining firm Plouton Resources Pty Ltd for an undisclosed sum.

A group company, Gujarat NRE FCGL Pty Ltd, would have first right of refusal on any marketing agreements for Plouton products and priority in equity participation in new projects, it said.

Gujarat NRE had last week picked up a 19.9% stake in Sydney-based Rey Resources Inc. to augment its coke supply, which gave it first right of refusal to buy Rey's minerals.

The Indian company has been building Australian partnerships to shore up its coal reserves to meet rising demand for coking coal among India's growing steel, aluminium and copper sectors.