US private equity (PE) giant Blackstone is learnt to be close to picking up a 25-30% stake in Hyderabad-based nuclear and space science components company MTAR Technologies for around Rs 300 crore. If the deal goes through, it will possibly be the first PE investment in the defence and nuclear space in India.
The privately-held MTAR makes critical components and products for nuclear reactors. The transaction, which comes in the backdrop of the Indo-US nuclear deal, is taking place in a company which was subject to US sanctions following India’s nuclear tests of 1998.
According to investment banking sources, Blackstone is expected to acquire MTAR shares from a fresh equity issue as well as from the promoters’ kitty. Repeated attempts by ET to reach MTAR chief executive V Sreeramulu and managing partner P Ravindra Reddy proved futile.
An email to Blackstone India chief Akhil Gupta failed to elicit any reply. MTAR is believed to have high profit margins and it is said that PE major Carlyle too was interested.
In the last three months, Blackstone, the world’s largest PE firm, has announced the management buyout of business process outsourcing company Intelenet Global Services and garment manufacturer Gokaldas Exports, in addition to picking a minority stake in Nagarjuna Constructions.
In all, the PE major has tied up deals worth about $800 million this year. The MTAR deal could set the benchmark for valuation of similar Indian companies eyeing the nuclear power generation and defence sectors.
In 2005, MTAR had indigenously developed a grid plate technology which will be used in the 500 MW prototype fast breeder nuclear reactor project coming up at Kalpakkam in Tamil Nadu. It will also supply control plug, control safety rod drive mechanism and diverse safety rod drive mechanism for the project.
Source: Economic Times