ICICI Venture Exits VA Tech Wabag
ICICI Venture Fund has exited VA Tech Wabag Limited by selling its remaining 4.65% stake for Rs.68.77 Cr through a bulk deal on NSE.
ICICI Venture sold 4.91 lakh shares held by its two funds - IDBI Trusteeship Services of India Advantage Fund I (sold 232163 shares) and Dynamic India Fund I (sold 259095 shares ) at Rs.1,400 per share, which is around 9.5% premium to VA Tech's closing price of Rs.1,279 on Monday.
The shares were bought by Japan-based Sumitomo Corporation. IDBI Trusteeship Services held 2.2% stake, while Dynamic fund owned 2.45% stake.
Transaction Reference: NSE
Incorporated in 1995 by Rajiv Mittal, Amit Sengupta, Shiv Narayan Saraf and S. Vardarajan, VA Tech is in the business of municipal water and wastewater treatment, industrial water treatment, operation and maintenance.
VA Tech India was initially a wholly-owned subsidiary of VA Tech WABAG GmbH, Austria. In 2006-07, ICICI Venture invested Rs.60 Cr fto fund the management team of VA Tech India to buyout the Indian company from its Austrian parent.
Last year, company raised Rs.125 Cr through fresh issue in IPO, while ICICI Venture raised Rs.134.82 Cr through offer for sale, following which which ICICI Venture's holding came down to close to 15% from 25% held pre-ipo.
ICICI Venture held a stake in the company through its three funds, namely India Advantage Fund I, Dynamic India Fund I and Rainbow Fund Trust.
In January this year, ICICI venture sold 10% stake in the company for Rs.162.67 Cr to Capital International Emerging Markets Growth Fund and Capital International Emerging Markets Fund through a bulk deal.
VA Tech posted total revenue of Rs.1241.8 Cr in FY2011 as compared to Rs.1229.4 Cr in FY2010. Its PAT in FY2011 is Rs.51.7 Cr as compared to Rs.44 Cr in FY2010.
Sumitomo Corporation is a diversified company with interests in trading of metal products, infrastructure, manufacture of automobile components; media, etc.
Sumitomo Corporation entered the wastewater treatment market in 2004 with a JV project in Mexico with France-based water service company, Degremont S.A. Currently it provides water treatment services to approximately 2.5 million people in Turkey, Mexico and other countries.
The current stake purchase may be a foot forward to acquire strategic stake in the company to enter the India's water treatment market.
In the water treatment space in India, recently material handling firm Tecpro Systems Ltd has acquired Chennai-based Ambika Projects (India) Pvt Ltd to expand into the water treatment sector.
In May, Mumbai-based Jaldhara Technologies, a waste water treatment and recycling equipment firm selling its product under 'Greywater' brand, raised Rs.9 Cr from Nexus Venture Partners.
In 2008, Jain Irrigation Systems and Isreal's water company Mekorot, joined hands to develop water infrastructure projects. Some listed peers of VA Tech are NCC Ltd (reveue of Rs.4782 Cr for FY10) and Thermax Ltd (revenue of Rs.3235 Cr for FY10).
Water treatment industry includes four kinds of water plants, namely water treatment, desalination, wastewater treatment and water recycling.
In the emerging countries, the Millennium Development Goals (MDG), adopted by members of the United Nations invites States to commit to reduce by half, the proportion of people who do not have access to drinking water or wastewater treatment, by the year 2015. The World Bank estimates up to additional $11 Bn each year in investments is needed to meet the MDG commitments. It is obvious that the sector is gaining increasing focus of governments around the world and this should provide significant growth impetus to the industry for next several years.
As per Global Water Markets 2008 data only 58% of the world‟s population is believed to have access to piped water supply, while a mere 36% of the global population is connected to a sewer network.
In India, under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) norms, it is strongly recommended for all beneficiaries (industries) to recycle atleast 25% of their waste water for non-domestic uses and for the very purpose JNNURM is willing to provide 100% funds as grants. Recycled water could be used in construction sites / cooling towers / gardening / toilet flushing / industrial uses etc.
Currently the concept of 24x7 potable water is virtually non-existent in India. This is also a priority sector under JNNURM.
Urbanization, obsolete technologies and availability of funds provide for huge untapped opportunities in the field of water infrastructure.
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