Temasek, the investment arm of the Singapore government, has picked up about 5 per cent stake in Godrej Consumer Products Ltd (GCPL) for Rs 685 crore. The acquisition is being made by Baytree Investments (Mauritius) Pte Ltd, indirectly owned by Temasek, at Rs 410 a share.
Godrej will invest part of these proceeds to acquire a 60 per cent stake in Cosmetica Nacional, a Chilean hair colours and cosmetics company, for an undisclosed amount. In its spate of acquisitions, this is first time that GCPL has roped in a private-equity player for funding a buyout. Temasek's investment has been routed through its subsidiary Baytree Investments (Mauritius) Pte Ltd.
With heritage brands such as Ilicit, U2, and Pamela Grant, Cosmetica Nacional is the market leader in the $110-million Chilean hair-colour business with a market share of 30 per cent.
Godrej Consumer is already present in South America through past acquisitions such as Issue and Argencos in Argentina (Godrej Argentina). This is the Godrej group's third acquisition on the continent and 10th international buyout in the past six years.
Mr Adi Godrej, Chairman, Godrej Consumer,, said, “Cosmetica Nacional is a natural addition to our earlier acquisitions in Latin America. The Chilean business will strengthen our presence in the region and set us on a firm footing to achieve our plans for Latin America.'' Currently, Godrej Argentina, after the integration of Issue and Argencos, is a market leader in Argentina with a 28 per cent volume share in the hair-colour market. It exports to over 30 countries and almost 80 per cent of its sales are to South American countries. The stock of Godrej Consumer closed at Rs 401.70 in Friday's trade.
BL Research Bureau reports : Given its many acquisitions in South Africa and Latin America in the last few years, the stock market may not be too excited by Godrej Consumer Products' latest foray into Chile. That the company has not yet disclosed the purchase price is also unlikely to go down well with the market.
From a long term perspective, with most Indian FMCG companies already established in South Africa, Latin America may be a less contested market to add to the portfolio.
However, what could stir up interest in the Godrej Consumer stock on Monday is news of Temasek picking up around 5 per cent stake in the company to infuse Rs 685 crore.
This suggests that Temasek is willing to value the Indian FMCG company at about Rs 13,700 core. That is a 5 per cent premium to its Friday closing market capitalisation of Rs 13,043 crore, providing room for marginal upside.