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Nirma raises Rs 4k-cr debt to fund Lafarge deal

In the largest rupee bond sale for a leveraged buyout, Ahmedabad-based detergent major Nirma on Thursday raised R4,000-crore debt to buy the cement business of French major Lafarge India.

By: | Ahmedabad | Published: September 16, 2016 6:31 AM
LafargeHolcim In July this year, Swiss cement giant Lafarge-Holcim had announced that it was entering an agreement to sell its assets in Lafarge India to Nirma for .4 billion or R9,400 crore to get clearance from the fair trade regulator Competition Commission of India (CCI) for the deal as part of the global merger. (Reuters)

In the largest rupee bond sale for a leveraged buyout, Ahmedabad-based detergent major Nirma on Thursday raised R4,000-crore debt to buy the cement business of French major Lafarge India.

The deal had been agreed upon in July. “The R4,000-crore five-year bond sale by Nirma offers a yield of 8.68% was oversubscribed 1.5 times. This is the largest rupee bond sale for a leveraged acquisition as also the largest AA-rated debt instrument,” investment banking sources reportedly said.

Sources added that the money for funding the deal was raised by Nirchem, a special purpose vehicle created by Nirma for the buyout. The company appointed Barclays, Credit Suisse and IDFC for managing the issue. I-banker sources called the 8.68% yield a “good pricing” for a AA rated company. They added that the issue had been closed successfully and would be listed on the exchanges. Nirma could not be contacted immediately for comment.

In July this year, Swiss cement giant Lafarge-Holcim had announced that it was entering an agreement to sell its assets in Lafarge India to Nirma for $1.4 billion or R9,400 crore to get clearance from the fair trade regulator Competition Commission of India (CCI) for the deal as part of the global merger.

The agreement, part of the building material major’s 3.5 billion Swiss franc (about $3.6 billion) divestment plan, is crucial for approval from CCI for the multi-billion dollar global merger between Lafarge and Holcim that was announced last year.

With 12 manufacturing facilities in India and the United States of America, the Nirma group has a presence in soaps, detergents, salt, soda ash, caustic soda, cement and packaging among others and has a turnover of over R7,300 crore.

Lafarge India, meanwhile, operates three plants and two grinding stations with a total capacity of around 11 million tonnes per annum in the country. With a presence in 90 countries, the Swiss giant will continue operations in India through its subsidiaries ACC and Ambuja Cement with a combined capacity of over 60 MTPA.

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