GE buys int Titagarh Wagons with a 15 per cent stake

Our Corporate Bureau
24 July 2007

Mumbai: General Electric Co.'s Equipment Services and Commercial Finance units have bought 15 per cent equity in Titagarh Wagons Ltd., GE said in a statement. It did not disclose the value of the transaction.

Titagarh Wagons Limited is a private sector railway wagon manufacturer, incorporated in 1997-98. It is primarily engaged in the manufacture or railway wagons, Bailey Bridges, heavy earth moving and mining equipment, and steel and SG iron castings of moderate to complex configuration. Titagarh is also Industry Partner to the Defence Research and Development Establishment, Indian Ministry of Defence. The company clocked a turnover of Rs 320 crore for the year ended March 2007, and is likely to go public in less than a year.

The relationship is seen to be strategic to strengthen the company's presence in India's rail freight infrastructure sector. This is GE's first equity investment in India, and GE's Equipment Services entry into the country, where it intends to serve all aspects of the country's infrastructure for the movement of raw materials and finished goods with financing, operating and monitoring services.

Less than a week ago, Kolkata-based Titagarh Wagons Ltd (TWL), received private equity investment from ChrysCapital, after which ChrysCapital holds a little over 10 per cent stake in TWL. The investment is estimated to be in the region of $10-15 million.

However, this is not the first strategic investment in TWL, as another private equity firm and a hedge fund hold about 14 per cent stake in the company prior to ChrysCapital's and GE's buy in.

As part of the relationship, GE Equipment Services will have preferred access to Titagarh-manufactured rail wagons, which the company will lease to Indian Railways and private shippers in India as rolling stock. Equipment Services will also become the preferred provider of vendor financing for Titagarh.