Binani Zinc to sell stake to US fund

The Binani group is likely to divest stake in Binani Zinc Ltd to a US private equity fund to raise resources for its proposed mining business in Gujarat and Rajasthan.

Binani Zinc has already floated a special purpose vehicle, RBG Minerals Industries, for mining operations. BZL now holds 100 per cent stake in RBG Minerals but later on Rajasthan State Mines and Minerals and Gujarat Mineral Development Corporation  would pick up stake in the outfit.

The group also looks for mines in Australia and the US. The Binani group also has a presence in cement and glass businesses.

Chairman Braj Binani told Business Standard after the annual general meeting of BZL that the company had initiated discussions with a foreign strategic investor for participating in the mining project.

"We are now giving detailed presentations to investors," he said. The executive director of BZL, D Sundarajan, informed that the group was now carrying out a valuation of the mines for which it had got allotment under RBG Minerals.

"We want to complete the valuation exercise within September," he said. According to him, the private equity fund would invest close to Rs 150 crore (Rs 1.5 billion) as a mix of debt and equity.

"The investor will get some stake in BZL in lieu of its investment in mining business, but the extent of its holding will be decided after the valuation," he said.

Binani Industries and Binani family combined hold 93 per cent in BZL. The holding would come down to 68.37 per cent following the offer to shareholders of Binani Industries for BZL shares.

Earlier addressing shareholders, Binani said the captive mining project would be a joint venture between Binani Zinc and mining companies of Gujarat and Rajasthan government.

"We expect to commission these projects during the current financial year," he added. Elaborating this, Sundarajan said RSMML and GMDC would respectively have 10 per cent and 25 per cent stakes in RBG Minerals.

"During the year, Rajasthan allotted the Basantgarh mines. RSMML has also agreed to transfer the mining lease contract of Deri mines in Rajasthan to RBG Minerals. GMDC is helping us for Ambaji mining lease in Gujarat," he said.

BZL posted a turnover of Rs 181.16 crore (Rs 1.81 billion) in 2005-06 and is expected to do better in the current fiscal following a one-time liability settlement scheme with IDBI.

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