Emerging markets fund Lambasa backs Ashapura Minechem's acquisition of Orient Abrasives

Mumbai-based mineral producer and exporter Ashapura Minechem Ltd has joined hands with emerging markets-focused private investment firm Lambasa Global to jointly acquire Orient Abrasives Ltd from the promoters for about INR 90 crore (approximately $14 million), according to a stock market disclosure.

The deal has been routed through Ashapura Minechem's wholly-owned subsidiary Bombay Minerals Ltd.

Bombay Minerals already owns 18 per cent stake that was acquired from Orient Abrasives' promoters for INR 54.9 crore ($8.6 million) in November 2013. Two arms of Lambasa own 4.83 per cent of Orient Abrasives.

The promoter Rajgarhia family holds 25.52 per cent in Orient Abrasives and has inked a pact to sell their entire holding in the firm.

Post the stake-purchase deal, Ashapura will own around 38.36 per cent while Lambasa will have 10 per cent stake in the company.

Ashapura and Lambasa have also made a mandatory open offer to acquire up to 26 per cent from the shareholders of the company at a share price of INR 29.5 per share, to meet takeover norms by capital markets regulator Securities and Exchange Board of India. This could cost them as much as INR 91.7 crore.

Established in 1971, Delhi-headquartered Orient Abrasives' manufacturing facilities are located in Porbandar, Gujarat and Bhiwadi, Rajasthan. It had recently demerged its refractory division into Orient Refractories with the intention of selling a stake.

The firm manufactures various types of high-alumina abrasive grains (including calcined bauxite), refractories and power.

Its products include aluminous raw materials, brown fused alumina, white fused alumina, pink fused alumina, white fused mullite, fused zirconia mullite, calcined bauxite and high alumina refractory cement.

Shares of Orient Abrasives were quoting at INR 25.35 each, down 2.87 per cent on BSE at 11:07 AM in a flat Mumbai market on Tuesday.