Apollo exits Welspun Maxsteel stake to promoter
Apollo Global Management has sold a 12.5% stake in India’s Welspun Maxsteel Limited (WMSL) to parent company Welspun Corp at a 30% discount to the fair market value. It’s the second part of a larger INR22.5 billion ($502.9 million at the time) deal between the two to fall through.
Welspun revealed in an exchange filing that it had bought the stake from Apollo affiliate Insight Solutions.
Apollo bought the WMSL shares in June 2011 for INR1.4 billion, as part of a deal to invest up to INR22.5 billion in line pipe manufacturer Welspun Corp. (WCL). It had also agreed to inject INR1.3 billion for capital expenditure in the metal company, which manufactures gas-based iron sponge and direct reduced iron.
Another INR6.75 billion was to be invested in WCL's construction and infrastructure services unit Welspun Infratech but the deal fell through in November last year after Welspun slowed down its infrastructure plans.
The unit was restructured last month when WCL demerged its pipes and plates business from its steel, infrastructure, oil and gas exploration and energy businesses, bundling them together into the newly formed Welspun Enterprises.
As part of the 2011 deal, Apollo invested INR13 billion in WCL. Of this, INR7.8 billion was spent on fully and compulsorily convertible debentures and INR5.17 billion through the purchase of non-voting global depository receipts at INR225 per share.
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