Welspun Enterprises Ltd (WEL) formerly Welspun Projects Ltd, part of the US$2.3 billion Welspun Group, has announced its plans to divest its stake in Welspun Energy.
Post sale of its renewable business, WEL’s 15.49 percent minority stake in Welspun Energy does not contribute to the consolidated results of the Company. In order to unlock value for the Company, the Board of WEL authorized the monetization of this stake, subject to shareholders’ approval.
As against its investment of Rs. 911 million, the stake is proposed to be sold to Welshop Trading Pvt Ltd, for a consideration of approximately Rs. 2.9 billion plus contingent consideration, thereby implying some than 3x returns to the Company on its investment.
In addition to buying out WEL’s stake, Welshop Trading Pvt Ltd has agreed to buy out the stake of other shareholders in Welspun Energy at equivalent consideration.
The services of both PwC and EY were engaged for this transaction. Khaitan & Co was the joint legal advisor.
“With this transaction, the Company continues its journey of consolidation and value creation for all its stake holders by enhancing focus on core businesses. This deal will further improve our balance sheet and cash reserve, which has set a stronger platform for future growth,” said Sandeep Garg, Managing Director, Welspun Enterprises Ltd.
