Reliance Cap acquires 14.81% in Kinetic Engg...
Reliance Capital Pvt Equity, a division of Reliance Capital, has acquired a 14.81% stake in Kinetic Engineering (KEL) through a combination of equity shares, convertible warrants and preferential shares for a total amount of just over Rs 38 crore.
Reliance Capital is set to acquire a 14.81% equity stake in the motorcycle, moped and auto component manufacturer, by acquiring 7.15 lakh shares at Rs 178 per share. This will amount to an investment of Rs 12.7 crore. It is also acquiring 6 lakh convertible warrants with each convertible into one equity share, at Rs 178 per share.
This aggregates to an investment of Rs 10.6 crore while its subscription to 1.50 crore preferential shares of KEL will aggregate an investment of Rs 15 crore. Warrants usually have a conversion period of 18 months.
Post dilution in equity and conversion of all warrants, the promoter family and persons acting concert (PAC) will bring down their holding to 45.3%. They currently hold close to 50%.
Sulajja Firodia Motwani, joint managing director, KEL, told ET that an extraordinary general body meeting of the company has been called on November 21 to seek approval of shareholders.
“This investment by Reliance Capital will bring us the financial strength, management and business acumen inputs and global business relationships of the Reliance group. We already have an order book of Rs 100 crore for our auto component business which we are hoping to grow,” Ms Motwani said.
She added that since Reliance Capital has invested in three different instruments with differing tenures, it would not be correct to total their investment.
Emphasising the promoter family's commitment to the business, Ms Motwani said MicroAge Instruments, an investment company belonging to the promoters, is subscribing to 9 lakh equity warrants of KEL, each warrant convertible into one equity share at Rs 178 per share. This calls for an investment of Rs 16 crore by MicroAge Instruments. Once these warrants are converted Reliance Capital's stake will remain below 15%.
For the past year, KEL has been focusing on developing its auto component business. It is positioning itself as an outsourced manufacturer of small engine and engine parts.
“We want to be a large manufacturer of small engines,” Ms Motwani said. KEL had earlier proposed a rights issue, whereby it would raise its authorised share capital from Rs 6 crore to Rs 15 crore. This, Ms Motwani said, is no longer necessary. “In light of the preferential issue, the board of directors at a meeting here today have decided to go with the preferential allotment rather than with a rights issue,” she said.
Ambit Corporate Finance were the exclusive financial advisers to the transaction and Ms Motwani said they have also picked up convertible warrants.
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