KKR restructures Indian cement investment

KKR’s capital for the investment comes from its Asian Fund II.

Global private equity firm KKR has sold its stake in a subsidiary of India’s Dalmia Cement Bharat Ltd (DCBL) back to the parent company in exchange for a stake in the latter.

DCBL will acquire KKR’s full 15 percent stake in Dalmia Cement through a combination of 7.5 million equity shares and $89 million in cash. The shares will enable KKR to take an 8.5 percent stake in the parent company.

KKR acquired its stake in Dalmia Cement, worth INR 7.5 billion ($165 million; $151 million), as well as Dalmia’s stake in OCL India and new projects across the country in 2010, according to a statement.

The transaction was structured through KKR Asian Fund II, a 2013-vintage vehicle that closed on $6 billion. Known investors in the fund include the California Public Employees' Retirement System, Canada Pension Plan Investment Board and New York State Teachers’ Retirement System.

DCBL’s cement business is one of the largest in the country, with a current capacity of 25 million tonnes. It also has a sugar division.

During KKR’s ownership, Dalmia Cement worked with members of KKR Capstone – the firm’s unit that provides services to portfolio companies – to focus on achieving operational change, increasing market share, improving coal procurement and focusing on environmental, social and governance issues that lead to sustainable business and growth.

KKR Capstone worked with the company’s sales management team to launch a comprehensive sales force effectiveness program. The firm also assisted DCBL in four acquisitions and new greenfield plants. As a result, DSCBL’s market share has grown from 7 percent in South India at the time of KKR’s investment to 10 percent as of July 2011, the firm said.

KKR has invested over $2 billion in India since 2006, which includes investments in injectables manufacturer Gland Pharma, tech company Aricent, telecom provider Bharti Infratel and coffee chain company Coffee Day Resorts.

In other news, KKR’s portfolio company from its Asian buyout fund, appliance manufacturer Qingdao Haier has announced it will acquire General Electric Company’s appliance unit for $5.4 billion. The transaction is subject to customary regulatory filings in China and customary anti-trust clearances in relevant countries.