PRIVATE EQUITY | Cesar Tordesillas, India

Blackstone, KKR eye Shriram unit stake

Blackstone Group and Kohlberg Kravis Roberts & Co are discussing to buy a large stake in the cement unit of the Shiram Group.

KKR already holds a stake in Dalmia Cements but has evinced interest in Shriram's cement unit independently.

Another US private equity Mount Kellett also met with Shriram on the potential investment opportunity even though it may not take the interest forward. Investment bank MAPE Advisory is advising Shriram on the fund raise.

"We are looking out for private equity investors for Sree Jayajothi Cements . Nothing has been finalized and we do not wish to comment anything beyond on this topic now," T Shivraman, MD & CEO of Shriram EPC said.

Blackstone declined to comment and KKR could not be reached for immediate response.

Shriram EPC has a 70% stake in Jayajothi Cements after it converted long pending dues into equity earlier thisyear. Original promoter Jayavilas Group holds the remaining shares.

Aditya Birla's likely acquisition of JAL cement plants may have a significant bearing on cement sectorvaluations and consolidation moves. Banking sources said Birla could value the asset at about Rs 9,000 or $150per tonne, which is seen as a fair price for strategic buyers. Shriram had valued Jayajothi at about $90 pertonne when it converted loans into equity, and expects to bring PE investor at about $100 per tonne.

Shriram wants a financial partner to steady the cement business, and would let the private equity keep an equalstake post dilution. Jayavilas too will sell stake but will not exit fully. Private equity investor along with Shriram, a diversified $9 billion conglomerate, would look to reap upsides selling the business to strategicbuyers in the next 4 to 5 years.

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