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Saturday, November 25, 2006

Reliance Cap eyes 10-20% in Gati

Reliance Capital is believed to be in talks to acquire a minority 10-20% stake in logistics solutions company Gati Ltd.

In February this year, Reliance Capital acquired a 44% stake in logistics firm DTDC Courier and Cargo Ltd for Rs 65 crore. The company was also involved in the race to acquire Patel Roadways but the deal failed to materialise according to media reports.

“The stake could be somewhere in the range of 10-20%,” sources told FE. Although the size of the deal is not known, a dilution of 20%, according to the market capitalisation of the company as on date, could fetch the company somewhere in the range of Rs 130 crore.

However, when contacted, GATI, in a e-mailed answer said, “We have already planned to dilute 15% to Singapore-based private equity investor TIFOI and FCCB holder, any further minority dilution may be done at a later date as now there is no need of funds as on date and we will not dilute any further equity.” ADA officials declined to comment.

The promoters currently hold 53% stake in the company. A 20% dilution would reduce the promoter holding to 33%.

Gati had recently announced plans to invest $100 million over the next three years to expand its operations in India as well as outside the country.

“The company has already tied-up funds worth $100 million through rights issue, Foreign Currency Convertible Bonds (FCCBs), warrants, shares to TIFOI and internal accruals, company officials said.

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