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KKR arm provides Rs 425 crore credit to KPIT's promoters

Livemint:  March 05, 2018

Mumbai: An Indian unit of global private equity leader KKR and Co. has provided Rs425 crore in structured credit to the promoters of KPIT Technologies Ltd to finance an open offer for the company, two people aware of the development said.

KKR India Financial Services Pvt. Ltd will provide debt finance to the promoters, who will use this money, along with the promoters of Birlasoft Ltd, to launch a joint open offer for KPIT, the first of the two people mentioned above said. The open offer, announced in January, is part of a larger plan to first merge the two companies and then split them into an enterprise digital company and an automotive technology company,

“The funding was raised by KPIT promoters to fund open offer obligations, if any. No further details will be shared,” said a KPIT spokesperson. A KKR spokesperson declined to comment.

Pune-based KPIT is a listed technology company specialising in IT consulting and product engineering solutions and services to automotive, manufacturing, energy & utilities and life sciences companies.

KPIT and Birlasoft plan to merge to create a $700 million combined entity that will later demerge into two separate companies, focused on ‘Digital Business IT Services’ (Birlasoft) and ‘Automotive Engineering and Mobility Solutions’ (the new KPIT Technologies) respectively.

As part of the merger agreement, C.K. Birla Group firm Birlasoft, along with promoters of KPIT will launch an open offer to acquire an additional 26% stake in KPIT at Rs182 per share, KPIT said in January. The open offer will be made by Proficient Finstock LLP (a KPIT shareholder), Kishor Patil (KPIT co-founder), National Engineering Industries (a Birlasoft promoter) and Birlasoft (India) Ltd among others, KPIT had said.

KKR India Financial Services has provided about $4.3 billion of financing to companies over the past eight years in India’s structured credit space.

Last month, KKR had backed Max India promoter Analjit Singh with a $325 million funding for debt restructuring.

KKR already owns about 10% stake in Max Financial Services, the newly spun-off arm of the Max Group that owns an approximate 72% stake in Max Life, India’s fourth-largest private life insurance firm.

Recently, another $20 million financing was made by KKR to CleanMax Solar, rooftop solar company backed by the US-based private equity major Warburg Pincus LLC. CleanMax Solar focuses on providing clean energy to corporates through rooftop and grid-connected solar installations. The company was founded in 2011, and has successfully installed more than 200 projects for over 50 leading corporate clients.

“CleanMax has taken routine project finance from KKR india financial services for one of our SPVs and it is a project specific long term loan provided to build, construct and operate 46.4 mw solar farm project in Karnataka,” said Nikunj Ghodawat, CFO, CleanMax Solar.

Through structured financing, KKR has funded close to 110 companies in India, some of which are GMR Holdings Pvt. Ltd, Avantha Group, TVS Logistics, coaching company Resonance Eduventures Ltd, Radiant Life Care Pvt. Ltd and Apollo Hospitals Enterprise Ltd.

In December, The Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund owned by the Emirate of Abu Dhabi, acquired a minority stake in KKR India Financial Services by investing an undisclosed amount. KKR India Financial Services was incorporated in 1995 as a non-deposit taking, non-banking financial company (NBFC).

As part of strengthening its lending business in India, KKR had appointed B.V. Krishnan in 2009 as managing director for capital markets. Krishnan was previously at Citigroup Inc., where he worked with Sanjay Nayar, now head of KKR India.

Besides KKR India Financial Services, KKR’s lending business in India is operated through various other arms—KKR India Alternative Credit Opportunities Fund, the first Alternative Investment Fund (AIF) raised by KKR India; and KKR India Asset Finance Pvt. Ltd, a realty-focused NBFC.

KKR India Asset Finance Pvt. Ltd had disbursed about $1 billion to various real estate projects and have done about 18 deals till date.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.