Welspun Group raises 2,250 Crore from Apollo

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Welspun Group raises Rs.2,250 Crore from Apollo
Mumbai: Mumbai-based Welspun Group, promoted by BK Goenka, raised 2,250 crore from Apollo Global Management, a private equity firm. Welspun Group has a corpus of $3 billion, which has diversified interests in various segments, from pipelines to textiles to infrastructure. The transaction is expected to close on or before August 12th, 2011.

Apollo will pick up a significant minority stake in the group's flagship Welspun Corp, for 1,305 crore of which 788 crore will be invested by way of a preferential allotment of FCD/CCD (Fully/Compulsory Convertible debentures) and 517 crore by way of non-voting Global Depository Receipts, and Welspun Maxsteel for 270 crore. They are in the negotiations for another 675 crore investment in the group's infrastructure business Welspun Infratech.

The company is currently producing DRI and is proposing to set up a 1.5 million MTPA high-end steel slab facility. This is an important step in creating an integrated business model and will enhance its capabilities to compete in the global oil and gas line-pipe market. It will also enable the business to withstand underlying volatility in steel prices and deliver predictable business and optimal solution to customers.

Welspun Group is an amalgamation of expertise, resources, opportunities and engineering excellence. It has a clientele, which includes most of the Fortune 100 companies operating in the Oil and Gas and Retail sectors like Chevron, Exxon Mobil, Wal-Mart and Target amongst others. They have a strong presence in over 50 countries with over 24,000 employees and over 100,000 shareholders. It is a one-stop service provider offering complete pipe solutions with a capability to manufacture line-pipes ranging from half inch to 100 inches.

With current capacity of approximately 2 million MTPA in Dahej, Anjar in Gujarat, three Little Rock, Arkansas in U.S. and Saudi Arabia, Welspun has undertaken some of the most challenging projects in different parts of the world. B. K. Goenka, Chairman, Welspun, said, "We are extremely delighted to have Apollo as one of our largest stakeholders. We believe that this partnership will pave the way for Welspun to continue on its path of becoming one of the leading line-pipe companies in the world." Goenka setup Welspun along with his cousin Rajesh R. Mandawewala who is the Joint Managing Director of the group.

The deal with Apollo also involves a restructuring where sponge iron firm Welspun Maxsteel will become a subsidiary of Welspun Corp. this deal will enable them to become a vertically integrated manufacturer in the oil and gas line-pipe industry. The group has already started consolidation of all its infrastructure businesses under Welspun Infratech, which is also a subsidiary of Welspun Corp. The Welspun group has earlier attracted private equity investors like ICICI Ventures, Temasek and 3i Group Plc.

Apollo is a leading global alternative asset manager with offices in New York, Los Angeles, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong. Apollo has assets markets and real estate funds invested across a core group of nine industries.

Joshua Harris, Managing Partner and Co-Founder of Apollo Global Management, said, "Welspun represents a leading global franchise that operates at the intersection of energy and metals, which are two of our core verticals, and we are very enthusiastic regarding the prospects of the company."

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