Contact us

ICICI Venture puts ACE on block

Two years after ICICI Ventures acquired ACE Refractories (formerly known as ACC Refractories), in what was the largest leveraged buyout by a private equity fund in India during that time, it is understood that the fund has now put the company on the block.

A source told TOI that two international funds and two global players in refractories have shown interest in ACE Refractories. It is learnt international biggies Goldman Sachs, Carlyle, RHI and Calderys have offered to buy the company as rapid growth in the domestic market continues to lure foreign firms.

Goldman Sachs, which had recently picked up a stake in National Stock Exchange, is one of the world's largest investment banks with earnings of $9.54 billion. The Carlyle Group, one of the world's largest private equity firms, manages more than $56 billion. Investment firms apart, there is the Vienna-based RHI, one of the world's largest players in the refractories business. And finally, there is Calderys, a part of the Paris-listed Imerys.

Sources said ICICI Ventures, the country's largest venture capital firm, is likely to make a return of four times on its cost of acquisition. It had acquired the refractories business from ACC for Rs 250 crore in 2005. Of the Rs 250 crore, Rs 100 crore was equity and the balance was debt. ICICI Ventures expects the prospective buyer to shell out Rs 550 crore. If one takes out the debt portion of Rs 150 crore, the return on its investment is Rs 400 crore, which is four times the money it paid. UBS Securities is believed to be advisor to ICICI Ventures for the sale of ACE.

If ICICI Ventures is successful in selling ACE, it would be its first exit from a company, in which it has made a complete buyout. Other companies where it has gone in for a buyout include Infomedia India (formerly, Tata Infomedia) and VA-Tech India (engineering services firm).

ACC sold it refractories business to ICICI Ventures after Swiss firm Holcim acquired a controlling stake in the company. Holcim wanted to focus on the core business of cement and concrete.

Post-takeover by ICICI Ventures, the refractories business, which makes heat- resistant cement products, has continued to perform well both in terms of sales and net profit. ACE Refractories has reported profit of Rs 30 crore on a turnover of Rs 290 crore. It has manufacturing facilities in Nagpur and Katni in Madhya Pradesh.

According to analysts, sustained economic growth in the country and large investment into infrastructure will lead to demand for steel and cement. This in turn will translate into demand for high-grade refractory solutions and hence the interest by these companies.

Source : Times of India

Comments are closed.