Most trusted Name in the NRI media
Serving over 22 millions NRIs worldwide

NRI, The Global Indian
Chatterjee the biggest takeover tycoon India has ever seen.

New Delhi, May 09 2005
The Indian Express
Dev Chatterjee reports

TCG’s Basell acquisition is the biggest M&A deal ever struck by any Indian abroad. Will Purnendu Chatterjee be able to pull off his biggest gamble ever?

When 51-year-old non-resident Indian Purnendu Chatterjee inked the $5.7 billion agreement in London on Thursday morning, corporate analysts in India were busy calculating the risk-to-return ratio of the deal that has made Chatterjee the biggest takeover tycoon India has ever seen.

Chatterjee — who is investing close to Rs 300 crore of The Chatterjee Group’s (TCG) funds in the Basell deal — is joined by a host of investors, including ICICI Venture Fund, Haldia Petrochemicals Ltd and international investor Access International who will shell out Euro 1-1.3 billion to buy out the 50:50 joint venture between BASF and Shell. Merrill Lynch will invest Euro 3.3 billion to fund the debt component.

For those who came in late, an IIT Kharagpur alumni, Chatterjee is the founding shareholder of Haldia Petrochemicals Ltd, an unlisted producer of polymers and chemicals, in which the West Bengal government also holds a stake. The Tatas hold a token 3 per cent stake in Haldia while TCG holds 43 per cent stake.

The Indian impact

There will not be much impact of the deal on the Indian polypropylene industry, where Reliance Industries plays a dominant role. At present, Reliance is the largest manufacturer of PP, PE and PVC in the country with a market share of 45 per cent. In fiscal 2005, its production volumes of PP, PE and PVC increased 3 per cent to 1,921,000 tonnes. Domestic demand increased by 3 per cent during the year, reflecting the impact of improvement in economy and stable prices.

‘‘Actually, the takeover is just a change in the ownership of the company,’’ says a Reliance official. ‘‘The volumes in the world will remain the same and there will not be any new capacity addition. Hence, we have nothing to fear,’’ he adds.

RIL operates the world’s largest grassroot, multi-feed cracker at its Hazira petrochemicals complex and its cracker produced 816,000 tonnes of ethylene and 395,000 tonnes of propylene. As Basell does not have any presence in the Indian market and Haldia will take on Reliance’s might in future, analysts say there will not be any implication on the Indian petrochem industry.

Here comes the tycoon

Before sewing the Basell deal, Chatterjee has some tough work to do at home. He has to first convince the IDBI to reduce high cost loans worth Rs 3,000 crore for HPL so that it can participate in the Basell deal as minority partner.

Chatterjee will also have to convince the Government of West Bengal to let HPL invest in Basell which — to put is simply — is like a small fish trying to gobble a big one. HPL is also planning an IPO by the end of 2005 which will see Chatterjee reducing a part of his equity in favour of new investors. ’’ The experience of Haldia has given us the confidence to go ahead and bid for Basell,’’ Chatterjee was quoted in the media.

Though he did not give any details on how he will raise funds for the $5.7 billion deal — which pipped L N Mittal’s $ 4.6 billion bid for International Steel of US — industry insiders say it will not be difficult for the man.

In order to close these deals, Chatterjee will have to rely on his 35-year experience — especially his 10-year stint in McKinsey where he worked on a number of M&A deals for clients. Chatterjee can also look forward to US-based investor George Soros of Soros Fund Management who helped him set up ‘The Chatterjee Group’ which is now an affiliate of the New York-based Soros Fund.


Any comments on this article or you have any news: Click here

Disclaimer will put up as many of your comments as possible but we cannot guarantee that all e-mails will be published. We reserve the right to edit comments that are published.

NRI Purnendu Chatterjee, Founder, The Chatterjee Group (TCG)
TCG is an affiliate of the New York based Soros Fund Management (SFM). Purnendu ventured into investing in public market and private companies with George Soros of SFM, after leaving McKinsey in 1986. For about a decade at McKinsey, he led major strategy and organization assignments for CEOs of large global companies. Apart from TCG, Dr. Chatterjee is on the board of directors of R&B Falcon Corporation, Indigo, N.V; and Global Power Investments (a joint venture with GE Capital and International Finance Corporation). Another of his ventures is CATS, a joint venture software firm with Computer Associates, USA. He invested around Rs.5000 crores in Haldia Petrochemical project in West Bengal and is a member of the board. He has a MS and PhD in Operations Research from University of Berkeley, California. Purnendu is a graduate of IIT-KGP.