The board of directors of Welspun Corporation (WCL), Welspun Maxsteel (WMSL) and, Welspun Infratech (WITL) on 29 June 2011 accepted an investment proposal from Apollo Global Management.
Apollo Global Management will invest about Rs 2,250 crore in the diversified Welspun Group through a series of structured investments in the form of convertible debt and equity. It will invest in the Group’s three subsidiaries – WCL, WMSL and, WITL. The investment is to be used towards Group’s expansion plans. WMSL is planning to set up 1.5 million tpa high-end steel lab facility.
Under the deal, Apollo will pay Rs 1,305 crore to acquire close to 20 per cent in WCL. The investment will be through fully/compulsorily convertible debentures worth Rs 788 crore and global depository receipts worth Rs 517 crore. The promoter holding in WCL was 41.07 per cent as of 31 March 2011. After Apollo’s investment, fresh equity will be raised and the promoter stake will be diluted by only two to three per cent.
Welspun’s promoter, B K Goenka will divest 87.5 per cent of his stake in WMSL to the group’s holding company, WCL, for Rs 805 crore. Apollo will pick up the remaining 12.5 per cent for Rs 140 crore and invest an additional Rs 130 crore for capital expenditure.
Meanwhile, Apollo is in parleys with B K Goenka, to invest up to Rs 675 crore in WITL. The investment could be in the form of equity, debt or a combination of the two.