E-Kantipur

KATHMANDU, NOV 11 -

In probably the largest sale of stakes by a Nepali company to a foreign partner, Khetan Group, one of the country’s leading business houses, sold its 4/5th of its 50 percent stake in Gorkha Brewery to Carlsberg Singapore.

The group sold its stake for US$ 40 million (around Rs 3 billion). With restructuring of shareholding, Carlsberg now owns the majority stake in Gorkha Brewery. Carlsberg Singapore is a 100 percent subsidiary of Carlsberg Brewery Malaysia Berhad.

The deal is one of the biggest ever corporate acquisitions in Nepal’s corporate history. And, there are few instances in the nation’s corporate history of majority stakes of a Nepali company being acquired by a foreign company. Nordic telecom operator TeliaSonera acquiring the majority stake in Spice Nepal Pvt. Ltd is another case.

Earlier, Panda Energy had sold its majority stake in Bhote Koshi Power Company to Himal International Energy at a cost of approximately US$ 22 million in 2006. Recently, Yeti Group acquired the majority stake in Gorkarna Forest Golf Resort for Rs 760 million. However, both were cases of foreign companies selling their stakes to Nepali companies.

What makes the Khetan-Carlsberg deal different from others is that Khetan Group has sold off its money-spinner to its joint-venture partner. The deal is one of the rare cases in Nepali corporate history where one of the promoters is moving out from a business that is the highest revenue earner for the group.

Established in 1989, Gorkha Brewery is the largest beer manufacturer of Nepal and has complete dominance in the domestic beer market with over 75 percent market share. The company is amongst the top ten taxpayers of the country. In fiscal year 2009-10, Gorkha Brewery had paid Rs 3.09 billion tax to the state. The brewery currently produces Carlsberg Beer, Tuborg Beer, San Miguel Beer, Royal Danish Tuborg Strong Beer and Gorkha Beer.

Gorkha Brewery is one of the best performing businesses in the entire Carlsberg Group. The company had won the Company of the Year from the Group in 2010. “Gorkha Brewery is one of our best performing businesses in the entire Carlsberg Group,” said Roy Bagattini, Senior Vice President of Carlsberg Asia. “From Carlsberg, we’re eager to further develop Gorkha business, its people and its strong protfolio of brands.”

The deal has made Khetan Group one of the cash-rich business houses at present. For many, selling the majority stake in Gorkha Brewery may be a surprise but for Khetan Group Chairman Rajendra Khetan, it makes huge business sense. “The group is looking for diversification and consolidation of existing businesses,” said Rajendra Khetan. “Selling our majority stake in Gorkha Brewery will help the group’s diversification strategy.”

The group is planning to venture into health and telecom sectors. And, its foray into the health sector will start with establishing a hospital in the Capital which will later develop into a medical college. “We’re on the verge of finalising land purchase for the hospital,” said Khetan. “The project will start within three months of finalising the land.”

With the regulator planning to increase the capital base of life insurance and non-life insurance companies, the money could be used to inject more capital in the group’s life and non-life insurance companies. In the proposed Insurance Act, the regulator has been given the right to fix the paid-up capital of insurance companies. The Insurance Board seeks to keep it at Rs 2 billion for life and Rs 1 billion for non-life insurance companies. The group also has stakes in two leading commercial banks—Laxmi Bank and Himalayan Bank besides Everest Insurance and Prime Life Insurance. At a time when foreign investors think twice about investing in Nepal, Carlsberg Group acquiring the majority stake in Gorkha Brewery has given a positive message. With US$ 40 million entering the country, the deal has also helped to better the balance of payment (BoP) deficit. 

 

Posted on: 2010-11-11 08:52

Post Your Comment

Please note that all the fields marked * are mandatory.
* Full Name
* Address
* Email Address
* Comment
* Captcha	Get another CAPTCHA code
Note:	Comments containing abusive words or slander shall not be published.