Lynched by the market mayhem sweeping across the US, investment banker Merrill Lynch has sold its entire stake (close to 5%) in the Chennai-based Carborundum Universal Ltd (CUMI) to a leading private equity player based in Singapore in the open market for a consideration of close to Rs 65 crore on Tuesday. It is learnt that Nalanda Capital of Singapore, a private equity firm run by non-Indian residents, has picked up entire Merrill stake in CUMI, sources close to the deal added.
The move follows the acquisition of Merrill?s entire assets by Bank of America on Monday as part of a bailout package. Despite repeated attempts, CUMI officials were not available for comment. A Kotak brokerage arm has reportedly negotiated the deal, sources said.
According to sources, Merrill Lynch, which has been with CUMI for almost two years, said to have sold close to 47 lakh shares, working out to be 5% of the company?s total equity share capital. However, Merrill Lynch has realised a better value than its original investment by divesting its stake in CUMI, sources said. The total holdings of FIIs, FIs and MFs in the company is estimated to be around 22.5%, the sources added. Given the company?s overall expansion plans, its market dynamics and its overall performance in both the domestic and global markets, the buyout of Merrill Lynch?s stake in CUMI seems to benefit the buyer immensely. Despite the recession, the company expects to end the fiscal with an EBITDA margin of 15% to 20% on a topline growth of 23%, sources pointed out.
?This is a good move and considered to be a good value buy,? said an analyst here. Sources said that the company?s fundamentals are strong and its products hold huge market both in the domestic and global markets. CUMI is the manufacturer of abrasives used in the automobile and engineering sectors. The share price of the company was down by 6.75% on the National Stock Exchange at Rs 123 on Tuesday.
