Jiangsu Longzhe Tech offers to invest $125 mln in India's aluminium alloy conductor manufacturer

Jiangsu Longzhe Technology and Trade Development Co Ltd has offered to invest $125 million (about INR 825 crore) in Diamond Power Infrastructure Ltd, the Indian electrical-equipment maker said. The investment will be subject to the approval of a debt restructuring process by lenders to the company, Diamond Power said in a stock-exchange filing.

Founded in 1970, Diamond Power makes equipment including power cables, conductors, wires, power and control cables transformers and aluminium alloy conductors.

The amount will be invested through a partially convertible instrument. The instrument will be partially converted to shares for a price not less than INR 103.5 apiece and will the investor a stake of no more than 51 per cent in the company, the filing said.

The company said that Longzhe is a diversified private group that has interests in education, infrastructure and entertainment among other sectors. It added that it had appointed Ernst & Young as an adviser for its debt restructuring plan and that it plans to raise at least INR 600 crore for working capital expenditure and expansion.

Diamond Power, specializing in manufacturing aluminium alloy conductors and control cables transformers among other electrical solutions, posted a consolidated net loss of about INR 60 crore on net sales of INR 1,515 crore for the nine months through December 2015.

Diamond Power’s shares have nearly tripled in the past two months to touch a one-year high of INR 62.65 apiece on Friday, May 13, from INR 22.05 on March 29. Also in March, Kotak Private Equity part-exited Power at a loss by selling more than a third of its stake through open market transactions. Kotak PE had a 0.83 per cent stake in Diamond Power at the end of March, according to stock-exchange data.