All in a day: FIPB clears Rs 4k cr of investment

NEW DELHI: Friday was a good day for foreign investment in the country, with the FIPB clearing deals worth over Rs 4,000 crore. This includes Holcim’s proposal for acquiring 67% stake in Ambuja Cement India and the United Breweries-Scottish & Newcastle deal.
S&N’s proposal to take its stake in UB group company United Breweries to 37.5% has now received the stamp of approval.

The Holcim transaction, including the open offer, amounts to $800m (Rs 3,400 crore) while the S&N deal amounts to Rs 770 crore. Holcim’s proposal has been referred to the Cabinet Committee on Economic Affairs after being cleared by the Foreign Investment Promotion Board (FIPB).

The consequent open offer from the Swiss cement major for raising its holding in ACC to 50.01% will also need CCEA’s approval.

CCEA approval is needed for investments above Rs 600 crore. Holcim had announced on January 21, ’05 its plan for the takeover of ACC through the acquisition of ACIL which owns 13.8% stake in the blue-chip.

Accordingly, the Swiss major proposed an open offer at Rs 370 a share for an additional 36.21% stake in ACC. It also proposed an open offer for the 5.92% public stake in another listed subsidiary of ACIL — Ambuja Cement Eastern (ACEL) — at Rs 70 a share.
The idea is to delist this subsidiary, thereafter. These open offers are awaiting Sebi approval. The Swiss major’s new investments will be routed through its existing investment vehicles in India, Holdcem Cements and Holderind Investments.

While the market has been speculating that the open offer price will be revised upwards and Holcim has been categorically denying that it will do so, the company’s proposal to the FIPB states, “Holdcem Cements, through ACIL, will be enhancing ACIL’s shareholding in ACC from 13.84% up to 50.01% (calculated on a fully diluted basis, taking into account outstanding employee stock options and outstanding convertible bonds due ’09, convertible into global depository shares of ACC) at a price of Rs 370 per share or such revised price as may be offered in the proposed open offer by Holcim India and ACIL.�

However, shareholders needn’t get excited, as when contacted, company sources categorically denied any revision in the open offer price. “This is just an enabling proposal to the government. It does not mean the open offer price will be raised,� they said.

The company has also sought a similar enabling provision on the price for its proposed open offer for Ambuja Cement Eastern.

The Swiss major has sought government permission for additional FDI up to $1.2bn (Rs 4,885 crore) for its proposed acquisitions in India. Holcim has also sought an enabling permission for acquiring up to 100% of the total paid up share capital of ACIL.