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With Dalmia exit, KKR cements India success

Abhineet Kumar/Mumbai 22 Apr 17 | 12:41 AM

When US-based private equity major KKR & Co first invested Rs 750 crore in Dalmia Cement (Bharat) in May 2010, the cement maker had a capacity of 11 million tonnes.

Today, Dalmia Cement boasts of a 25-million-tonne capacity and KKR earned bragging rights for scripting another successful investment. Seven years later, KKR fully exited the company in a block deal worth Rs 1,534 crore. 

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KKR had part exited the company in January 2016, earning Rs 1,218 crore. In this process, it made Rs 2,752 crore, a return of 3.6 times, on its investment in the cement maker in seven years. With this deal, KKR’s total exit from India has earned it about $2.6 billion.

“In our PE investments for manufacturing and industrial companies, we have tried to back entrepreneurs who want to build scale," Sanjay Nayar, chief executive officer of KKR India, had told this newspaper earlier. 

KKR’s success has been unique in India, especially in the context of its investments in manufacturing companies. In March last year, it sold its controlling stake in off-highway tyre maker Alliance Tire Group to Japan's Yokohama Rubber for $1.05 billion. This gave it a return of 2.8 times for an investment made in April 2013. In August, when Shanghai Fosun Pharmaceutical bought 86 per cent in Hyderabad-based Gland Pharma for $1.26 billion, it gave KKR 2.67 times return on a $231-million investment made 30 months ago. Last month, the deal was approved by the Foreign Investment Promotion Board. Once completed, the deal will make KKR’s returns from India more than $3 billion.

Such deals have helped KKR accelerate its investments in India in the past year. The global PE giant, along with Canadian pension fund CPPIB, invested $952 million in telecom tower company Bharti Infratel last month. About 70 per cent of this was KKR’s alone. This has taken KKR's private equity investment in India to about $4 billion, up from $2 billion about a year-and half ago. Other investments include $265 million with along with Temasek in SBI Life, about $210 million in Avantha Holdings and $155 million in TVS Logistics Service, with CDPQ. “The time is right to do larger deals to help Indian companies scale and globalise," Nayar had said last year. 

KKR’s success stories in manufacturing is also due to capital solutions tailored to a company's needs, while also providing the required value addition. It has extended $4-billion structured financing to business groups across sectors through credit, non-banking financial companies and the capital markets business.

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