Private equity funds eye Mysore

Private equity funds eye Mysore
Published: 18 April 2006

Private equity funds and other financial investors are believed to have shown interest in buying a large stake in Mysore Cement (MCL), the Bangalore-based SK Birla group company, sending the company’s shares shooting through the roof.   MCL shares have jumped 81 per cent in three months to Rs 49 on the speculation that a deal is imminent. The buzz has also drawn in MNC cement firms such as Lafarge and Italcementi, though it is not known if these firms have had any serious talks with Mysore Cement. Mysore Cement has a capacity of 2Mta and sells cement under the Diamond brand name.
 A top SK Birla group official said that the firm’s management has been receiving offers and requests from different private equity funds. Some talks have also taken place, he added. "There are enough rumours floating around in the market. Currently, we have no plans to bring in a strategic partner," SK Birla, chairman, MCL said. But he declined comment when queried specifically about speculation that Lafarge is in talks with MCL to pick up equity. 
Lafarge now manufactures about 5mt of cement in its three plants in Chhattisgarh and Jharkhand. The SK Birla group now holds a 25.13% in MCL while the group’s textile firm Birla VXL holds 4.75%. Other SK Birla group companies hold the remaining 21%. Market sources said that the interest in the stock was mainly because of speculation that the company would be acquired either by the foreign cement firms like Lafarge or Italcementi or some other leading private equity fund. 
Many private equity and debt restructuring funds have already picked up chunks of various companies, thereby lending credence to talk that MCL could also be in their cross-hairs.  GE Capital, ADM, JP Morgan, DSP Merill Lynch, and Actis have picked up stakes in Sanghi Cement, Saurashtra Cement, OCL, Dalmia Cement and Binani Cement.