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Apollo to invest $500 million in Welspun and its subsidiaries

  • Anita Davis
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Apollo Global Management is to invest up to INR2,250 crore ($502.9 million) in India-based pipe manufacturer Welspun Corp. (WCL). It is one of the largest private equity transactions in India this year and the largest that Apollo has made in the market to date.

According to Apollo, the firm will first invest INR1,305 crore ($291.7 million) in WCL - INR788 crores via a preferential allotment of fully and compulsorily convertible debentures and INR517 crore through the purchase of non-voting global depository receipts at INR225 per share. After 18 months, the debt portion will convert into equity at INR225 per share, representing 13.3% of WCL's total equity capital.

Of the remaining INR945 crore ($211.2million), INR140 crore will be spent on a 12.5% stake in Welspun Maxsteel (WMSL) - with WCL paying INR805 crore for the remaining 87.5% - INR130 crore has been committed to capital expenditure, and INR675 crore could be injected into Welspun Infratech (WITL), a WCL subsidiary that deals in construction and infrastructure services. The latter investment is still under discussion.

"Welspun represents a leading global franchise that operates at the intersection of energy and metals - two of our core verticals - and we are very enthusiastic regarding the prospects of the company," Joshua Harris, managing partner and co-founder of Apollo Global Management, said in a statement.

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