Mining billionaire Anil Agarwal- led Vedanta Limited today announced the acquisition of a controlling stake in Japanese glass substrate manufacturer AvanStrate Inc from global private equity firm Carlyle Group.
Its wholly owned subsidiary Cairn India Holdings Limited (CIHL) will invest USD 158 million in AvanStrate as part of the transaction which also includes taking over debt and extending a loan, the company said in a statement.
It will take over AvanStrate's debt of USD 151 million from the company's lenders and extend USD 7 million as a loan. The face value of AvanStrate's debt is USD 299 million, which means its lenders are taking a haircut.
In return, CIHL will get a little over 51 percent stake in AvanStrate "for a nominal consideration from Carlyle Group", the statement said.
AvanStrate is majority-owned by Carlyle. Its other major shareholder is optical products maker Hoya Corporation.
"Through a combination of these elements, this transaction provides both strategic control and attractive returns to CIHL," it said, adding the acquisition is subject to consents being obtained from AvanStrate's lenders by end of the month.
Agarwal has been keen on entering LCD manufacturing business and had in February last year announced setting up India's first integrated LCD module manufacturing facility in Nagpur at an investment of USD 10 billion in five phases.
The investment in AvanStrate may give a fillip to the project.
AvanStrate, the statement said, makes glass substrates for small and medium-sized a high-resolution thin film transistor (TFT) liquid crystal display (LCD) panels, which are used in screens for devices including smartphones, cameras, flat screen televisions and tablets. Glass substrate is made of silicon and metallic oxides.
"Further to Vedanta's focus on providing basic materials for the development of India and other emerging markets, this transaction provides optionality to the growing market of materials for technology applications," it said.
AvanStrate supplies glass substrate to small and medium-sized TFT LCD panels, used in many mobile devices, and India has a significant market potential for such devices.
AvanStrate was founded in Japan and has operations in Korea and Taiwan. It had a net profit of USD 1.4 million on a turnover of USD 169 million in the year ended March 31, 2017.
Nomura acted as the financial adviser to CIHL on this transaction.
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