The company will make an investment in two tranches in the Chennai-based PVC firm via equity and fixed income securities.
Investment firm Fairfax India will acquire 30% stake in Chennai-based Sanmar Chemicals Group for an investment of $300 million (nearly Rs 1,995.83 crore).
Fairfax, the Canadian billionaire Prem Watsa-owned group, will make this investment through equity and fixed income securities.
Sanmar Chemicals is one of the leading PVC manufacturers in India with an installed annual capacity of around 3 lakh tonnes.
"Fairfax India Holdings Corporation announces, through its wholly-owned subsidiaries, it has agreed to invest $300 million (nearly Rs 1,995.83 crore) into the Sanmar Chemicals Group," the company said in a statement.
"As a result of this investment, Fairfax India will acquire a 30% equity ownership in Sanmar and also generate a fixed return on its investment," it added.
Fairfax India will invest in two tranches. In the first round, it will invest $250 million (nearly Rs 1,663.2 crore), post completion of the deal.
The company said it cannot invest more than 25% in any single investment deal, and therefore, it will fund an initial tranche of $250 million (nearly Rs 1,663.2 crore) upon closing of the transaction.
The second tranche of $50 million (nearly Rs 332.64 crore) will be completed within 90 days thereafter by Fairfax Financial Holdings or another investor.
The first tranche is expected to be completed in the second quarter of 2016 upon the satisfaction of certain conditions precedent, including the establishment of a term loan facility for $80 million (nearly Rs 532.22 crore) between TCI Sanmar Chemicals Egypt, the Egyptian subsidiary of Sanmar, and its lenders, the statement said.
"Sanmar, under the leadership of N Sankar, one of the pioneers of the Indian PVC industry, and his son, Vijay Sankar, and their highly experienced management team, is well placed to cater to the growing demand for PVC in the emerging markets of India, the Middle East and Europe," Prem Watsa, Chairman of Fairfax India, said.
Welcoming the investment, Sanmar Group Chairman N Sankar, said, "We are excited at having Fairfax as a long-term partner. Sanmar will benefit by having a financially strong shareholder with a global footprint. We look forward to the expansion of our capacities in Egypt and India creating value for all stakeholders."
The Sanmar is in the process of expanding its PVC capacity in Egypt from 2 lakh tonnes per annum to 4 lakh tonnes.
Once the expansion programme is completed, Sanmar will have a total PVC capacity of over 7 lakh tonnes per annum, making it one of the largest PVC companies in the world.
In addition, Sanmar also manufactures caustic soda, chloromethanes, refrigerant gases, industrial salt and speciality chemical intermediates.
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