VA Tech Wabag now seeking acquisitions investments to Fuel its Growth

VA Tech Wabag, a water and waste management company, said Monday that it is keen on investment in acquisitions to fuel its growth and expansion. In the announcement, the company said it was currently seeking both local and offshore markets investments and as such, it will commence its initial public offering (IPO) of about Rs 500 crore over the coming three months, according to a senior company official.

Rajiv Mittal, VA Tech Wabag’s managing Director, said the company had applied for the market regulator’s approval for the IPO and is expectant that Sebi, the market regulator in India, will give it the approval soon. In that regard, he noted that VA Tech Wabag may commence its IPO within the coming three months.

It is expected that part of the company’s current investors may cut down their stakes in the company, for instance the ICICI Venture, Passport Capital and GLG of the UK amongst others may make that move. However, Mittal would not divulge the details of the deal, rather saying that the exact deal details will be availed after the Sebi has approved the sale, and the IPO date is near. He further added that the company’s promoters, management team, would not dilute their stakes in VA Tech Wabag.

It is widely believed that ICICI Venture is planning to cut nearly 10% of its stake in the company but Mittal was not forthcoming over this allegation. The company plans to use the resources it will accrue from the IPO to fund its acquisitions and increase its investment in build, own, operate, and transfer (BOOT) projects. Additionally, some percentage of the accrued funds will be put into working capital purposes and for the establishment of a corporate office in Chennai, said Mittal.

The company said its main interest is in acquisitions in emerging markets as opposed to the developed countries. In that regard, China, Asian and African markets are high on its list of places for targeted investments. The company’s investments are to be undertaken in the water treatment segment and must fit with its culture and business strategy, be hi-tech and enable it open up new geographies, Mittal added.

Mittal noted that VA Tech Wabag is a cash rich company and funding for the investments won’t be an issue, adding that if possible, the company may even go for multiple acquisitions. It will be spending almost Rs 45 crore to establish its corporate Chennai office that is expected to be operational by latest, end of 2011.

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