MUMBAI: Personal care products maker Godrej Consumer Ltd had decided to sell a 4.9% stake to Baytree Investments, an arm of Singapore-based investment firm Temasek, to raise Rs 685 crore for acquisitions and reduce debts.
Baytree will subscribe over 1.67 crore shares at Rs 410 a share on a preferential allotment basis, subject to the signing of a share subscription agreement and shareholders approval.
"The fund will be used for further acquisitions as well as reduce debt in the company," chairman Adi Godrej said on Saturday. "If we had to do QIP, there would have been significant cost. Hence, we chose the preferential allotment route," he said.
The fund raising plans followed after the maker of Cinthol and Goodknight announced on Saturday it will acquire 60 % stake in Latin America's Cosmetica Nacional, a hair care and cosmetics company for an undisclosed sum. However, the company said the deal is nine times the company's Ebitda of 20% and with its annual sales of 36 million, the deal size comes to roughly Rs 200 crore.
The Chilean firm, which owns brands such as Ilicit, U2 and Pamela Grant exports to over seven countries in the region and will serve as another distribution platform in Latin America. This is GCPL's third buy in Latin America after acquisition of Argencos and Issue two years ago. Godrej also said he continues to look for buys in Africa, Asia and Latin America.
"The acquisition will give the company a strong leadership position in the particular region. In addition, the fund raising plan will help them acquire more companies," said Anand Mour, senior analyst at Ambit Capital.
In the last four years, the Indian soaps, deodorants and hair colour maker has acquired nine firms including Indonesia's household care firm PT Megasari Makmur Group, Nigerian personal care company Tura and two South African haircare brands, Rapidol and Kinky.
Apart from acquisitions, GCPL also merged Godrej Household Products with itself and earned profits by selling Sara Lee's brands where it was a licensee. The company also announced its third quarter numbers posting a higher-than-estimated 41% rise in October-December quarter profit despite foreign exchange losses.
The company posted a net profit after minority interest of Rs 272 crore during the quarter. Its revenue rose 36% from a year ago to Rs 1,344 crore helped by global acquisitions and new product launches in domestic business.
The company incurred a foreign exchange loss of `6 crore compared with a forex loss of Rs 1 crore a year ago. Godrej Consumer had 20% sales growth in its domestic business on account of higher volume or consumer demand with net profit increase of 12%.
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