Warburg may defer GACL plan

MUMBAI: Warburg Pincus, one of the largest private equity investors in India, is unlikely to take up its option of buying an additional 4.8 per cent in Gujarat Ambuja Cements due to sharp fall in the share price of the cement major.
The option expires at the end of September this year.
Last year, the private equity fund had acquired five per cent of GACL at Rs 225 per share, a 16 per cent premium to the then market price of Rs 193.65 per share.In the process, the company received Rs 198 crore by selling five per cent of the promoter’s stake to Warburg Pincus.
GACL executive director Anil Singhvi said, ‘‘It is too early to comment. Anyway we have not factored that investment into the company.’’
The company was to receive an additional Rs 162 crore from the transaction thereby inviting a total investment of Rs 360 crore to fund its expansion and augment its debt.
According to the deal entered between the two parties, Warburg Pincus can acquire an additional 4.8 per cent stake in GACL by subscribing to additional 80 lakh shares of GACL shares from the company’s promoters at Rs 225 per share.
The Rs 225 per share, at the current market price of Rs 165, translates into a 36 per cent premium. Warburg Pincus can exercise its option before September 30, 2002.