MCap-backed Jyothy Labs secures $110m loan

The five-year loan, provided by Axis Bank, will pay down part of the debt Jyothy incurred to buy a majority stake in the Indian subsidiary of Henkel, managing director Ullas Kamath told Reuters.

MCap picked up a 1% stake in the fabric whitener manufacturer for $5 million last May. That same month, Jyothy Laboratories acquired an additional 68.76% stake in Henkel India for INR5.7 billion, having already invested INR607.3 million for a 14.9% stake in March. Jyothy Labs was supported by a debt package from ICICI Bank, Kotak Mahindra Bank and Axis Bank for this transaction, according to sources.

"The fundraising is largely to meet our short-term debt requirement," said Kamath of the Axis loan, which has a floating interest rate of 11.25% and a principal moratorium period of 18 months.

A source said that Jyothy has put its plan to raise cash from a private equity deal on hold due to the poor economic environment, ostensibly referring to the fact that Apax Partners was reportedly closing in on a 26% stake last June. At the time, several private equity firms - including Actis, The Carlyle Group and TPG Capital - had been negotiating with the Mumbai-based company over the $150 million deal. Apax was said to have sweetened the deal by proposing the hire of a top FMCG executive to buoy Henkel and spark growth in other areas.

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• Topics
• South Asia
• Restructuring
• Consumer
• Consumer
• MCap Fund Managers
• Apax Partners Hong Kong
• India