Citi Venture Capital International (CVCI) - a private equity
) - is expected to make an investment of $72.1 million (INR 400
crores) in India-based Sree Jayajothi Cements,
The Times of India
reported on Monday. Sree Jayajothi Cements - a diversified unit of
Shriram Group - has a plant in the Kurnool-Kadappa region of Andhra
Pradesh with a production capacity of 3.2 million tons per annum.
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With the ongoing concerns among global buyout firms about investing
in India as returns have gone down due to rupee depreciation, the
prospects of the Indian cement sector is on the verge of a
downtrend. Some movements in the sector are visible, as recently
Irish giant CRH and Aditya Birla have shown interest in purchasing
the Gujarat plants of Jaypee Cements.
Among other private equity firms,
The Blackstone Group LP
Kohlberg Kravis Roberts & Co.
) and Mount Kellet were in talks about investing in Jayajothi. For
converting its loans into equity, Shriram Group acquired a 70%
stake in Jayajothi earlier in 2012.
With Jayajothi having large debts and ongoing regulatory intrusions
in the cement sector, a definite deal is long awaited. Shriram
Group aims to get a financial partner for the revival of the cement
unit. Moreover, it plans to bestow equal stake post-dilution to the
Moreover, Chennai-based Shriram Group had valued Jayajothi at
approximately $85-90 per ton when loans into equity were converted,
and therefore anticipates same valuation for new investors.
CVCI is a private equity firm, specializing in restructuring and
industry consolidations in emerging markets. It focuses on private
equity groups which make investments for entrepreneurs and business
families. CVCI recently invested INR 764 crore in Mumbai-based Cox
& Kings. The company is looking for the best investment
opportunities in India to increase profitability.
Recently, the private equity arm of
The Goldman Sachs Group Inc.
) and New Enterprise Associates (NEA), an American venture capital
fund, came together with an investment of $54 million in
Bangalore-based Nova Medical Centers. Nova is a leading Indian
healthcare firm for day/short-stay surgical care and fertility.
Citigroup currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating. Considering the fundamentals, we also
maintain our Neutral recommendation on the stock.