KEC International Limited is set to buy SAE Towers Holdings LLC (SAE Towers) for $95 Mn from Washington-based private equity firm ACON Investments.

The transaction is expected to close in September 2010, subject to regulatory approvals and customary closing conditions.

This acquisition will strengthen KEC’s global leadership position in the large and growing markets of North America and Latin America. SAE Towers has a significant presence in geographic areas which are of substantial interest to KEC.

Headquartered in Houston, Texas, SAE Towers is the manufacturer of steel lattice transmission towers in US with annnual production capacity of 100,000 metric tons. (Monterrey, Mexico ‐ 35,000 MT & Belo Horizonte, Brazil ‐ 65,000 MT). It also manufactures steel poles for electrical transmission as well as related hardware. SAE Towers currently has over 750 employees.

SAE Towers’ management team and employees will continue with the Company.

KEC was advised by Sagent Advisors Inc. and Daiwa Capital Markets India Private Limited as financial advisors, KPMG as accounting advisor, and Khaitan & Co. and White & Case LLP as legal advisors on this transaction. SAE Towers was advised by Harris Williams & Co. as financial advisor and Hogan Lovells LLP as legal advisor.

Transaction Reference: Indiainfoline

SAE Towers is a limited liability company incorporated in Delaware, USA along with its operating subsidiary companies in Brazil, Mexico and the USA. It has manufacturing facilities in Brazil and Mexico and a tower test station at Brazil.

Under the leadership of Mr. Luigi Ruggieri, SAE Towers’ CEO, who partnered with ACON in 2007 to acquire the assets that comprise SAE Towers from the ABB Group, the Company will continue to provide its clients throughout the United States, Canada, Brazil, Mexico and the rest of Latin America with highly‐engineered structures critical for the construction of high‐voltage transmission lines.

KEC International, a part of RPG Group is engaged in T&D EPC space with projects carried out in over 40 countries. It has 210000 tonnes of transmission and telecom tower manufacturing and sourcing capacity located at Butibori, Jaipur and Jabalpur in India. It has three tower testing facilities located at Jabalpur, Jaipur and Vashi and has capability of testing towers upto 1200KV.

In mid 2007 KEC merged RPG Transmission and NITEL with itself, which provided KEC larger scale and broader market in transmission and telecom business. Last year it merged RPG cables, the group company present in cable business with itself.

KEC has five strategic business units looking at Power transmission project, power distribution and substation projects, cables, telecom and railways contracts.

KEC is bidding for BOOT and BOOM projects in India. Currently it participating in most of the transmission infrastructure project in JV with its partners.

KEC plans to incur Rs.160 cr of capex which includes Rs.100 cr for transmission and distribution business and Rs.60 cr for the cable business.

In cable business it plans to expand the product portfolio by manufacturing 220kV & 132 kV class of cables. Altogether it has Rs 1000 mn capex plan for cable business out of which Rs 600 mn would be incurred in the FY11.

For Q1 FY 2011, KEC posted a standalone turnover of Rs.824 cr with a PAT of Rs.20.7 cr. As o June 2010, its order book stood at Rs.5650 Cr with 75.6% orders from transmission, 18% from
distribution, 4.4% from railways and 2% from cable.

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KVEZAR VIEW

  DEAL TRACKER FOR

Date	Transaction	Type	Buyer	Size ($mn)
23/09/10	SAE Towers Holdings - KEC International	M&A	KEC International Limited	95.00

 

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  Profiles

Company
Name	Promoters	Office	Competitor	Website
KEC International Limited	RPG Group	1st Floor, CEAT Mahal, 463, Dr. Annie Besant Road, Worli, Mumbai-400030. Maharashtra, India.	Jyoti Structures Limited Kalpataru Power Transmission Limited	www.kecrpg.com

  Advisor

Daiwa Capital Markets India Private Limited