IFC to invest $40 mn in West Coast Paper

The World Bank-private equity arm International Finance Corporation (IFC) will invest $40 mn (Rs. 180 crores) in West Coast Paper Mills Limited. It has completed the due diligence of West Coast and a formal announcement is expected to come soon.

The Rs. 550 crore-West Coast Paper Mills will get the investment from IFC by April. The investment will be made in the form of debt for the company’s Rs. 1000 crore-expansion plans, but there would be no equity sale to IFC.

Private equity investment in domestic paper companies is rising steadily and could grow further as the sector prepares to spend Rs. 13,000 crores in the next three years to expand capacity. IFC earlier had invested $40 mn in Andhra Pradesh Paper Mills Limited in debt and equity.

West Coast has plans to ramp up capacity from 180,000 tonnes to 300,000 tonnes per annum in the next three years. The company has recently placed orders to global firm Metso for pulp line.

Local paper companies, including Ballarpur Industries (Bilt), Tamil Nadu Newsprint, JK Paper and West Coast, will be adding over 2 mn tonnes in capacity to the current total capacity of over 6 mn tonnes in next three-year period.

Read the article in DNA Money.

Mumbai-based Rama Pulp and Paper acquires newsprint company

Mumbai-based cultural and specialty paper maker Rama Pulp and Papers is acquiring a newsprint company for Rs. 60 crores. The deal will be funded by an undisclosed foreign fund. Rama Pulp has declined to name the target company and the foreign fund owing to confidentiality clauses.

The fund will provide Rs. 50 crores for the acquisition while the rest will come from the company’s internal accruals.

Opportunities in newsprint and its low costs have attracted foreign players too, with majors such as Stora Enso and UBA mulling options to build a plant in India mainly to cater to the local market.

Of late, foreign funds’ interest in the Indian paper sector has been growing steadily. IFC, the investment arm of the World Bank is already in collaboration with West Coast Paper, JK Paper and AP Paper. Other firms like Goldman Sachs are more keen on picking up equity stakes in Indian paper companies as an 8% growth in the local economy makes paper all the more attractive.

Read the complete article from The Economic Times.