Continuing its acquisition spree, electric equipment manufacturer Crompton Greaves Ltd said it will pick up a 41 per cent stake in Avantha Power and Infrastructure Ltd, a part of the Avantha group of companies.
Crompton Greaves will invest Rs227 crore in APIL, picking up shares of the face value of Rs10 at a book value of Rs11.
The Avantha group arm is an independent power producer engaged in the generation, transmission and distribution of electricity.
APIL has four captive power plants, and is in the process of setting up two new independent power plants with a capacity of 600 MW each in Madhya Pradesh and Chhattisgarh. Existing shareholders in APIL include Ballarpur Industries Ltd.
Cromptom Greaves views power generation, transmission and distribution as a strategic opportunity for its future growth. This is its second acquisition in the past six months. In September 2008, it acquired US-based MSE Power Systems Inc and its group companies - MSE Engineering LLC & MSE West LLC - for an enterprise value of $16 million.
In June last year, Crompton Greaves acquired French firm Societe Nouvelle de Maintenance Transformateurs (Sonomatra) for about 1.30 million euros ($1.76 million), while in 2007, it acquired Ireland's Microsol Holdings Ltd for $35 million.
Since APIL is part of a group of companies, the investment proposal was referred to a committee of independent directors for evaluation, while an external professional valuation of APIL was also done by KPMG India Pvt Ltd. The committee recommended the investment after assessing the prospects and potential of APIL, as well as the features and progress made in its new IPP projects.
Meanwhile, Crompton Greaves has informed the Bombay Stock Exchange (BSE) that the board has approved the buy-back of fully paid equity shares of Rs2 each from the open market at a price not exceeding Rs170 per share, up to an amount of Rs224.15 crore, which is 25 per cent of the total paid-up capital and free reserves. It has also declared an interim dividend of 50paise per share.