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Wednesday, May 10, 2006

International Tractors plans IPO

International Tractors, ITL is planning to go in for an initial public offering, IPO and is in talks to offload a further 10-per cent stake to a private equity player to raise funds for its overseas expansion plans, reports The Hindu Business Line.

According to Mr L.D. Mittal, Chairman, ITL, the company is likely to go in for an IPO in the beginning of 2007. "Further we are in talks with a few private equity firms to offload about 7-10 per cent in ITL. This transaction, which should materialise in a month's time, would take the total number of private equity/strategic investors in ITL to four," he said.

ITL, which makes the Sonalika brand of tractors, had recently offloaded 10 per cent stake to private equity major 3i. Citigroup already holds 10 per cent stake in ITL, while Japanese tractor maker Yanmar has a stake of 12 per cent.

ITL plans to use the funds to set up/acquire tractor assembly units outside India. The company has identified Africa as a focus region and plans to set up two units in the continent. "The units should come up at a cost of Rs 100 crore each. This would be done in tie-up with a local joint venture partner," Mr Mittal said. ITL already has a marketing/distribution tie-up with the Tata Group to sell its tractors in Africa.

The company is also in talks to acquire a tractor company in Eastern Europe, which would allow it to build an export base for all of Europe. Setting up a manufacturing base in Eastern Europe has become advantageous after most countries in the region joined the EU, as these countries can now be utilised as a low-cost export base.

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