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PE firm WL Ross in talks with China’s Shandong Ruyi to sell OCM India stake

LiveMint logoLiveMint 15-05-2017 Deborshi Chaki

Global distressed assets and special situations investor WL Ross and Co. Llc is in talks with China’s Shandong Ruyi group to sell its entire stake in textile maker OCM India Pvt. Ltd, said two people aware of the discussions.

The talks are currently at the term-sheet stage and a deal is likely to be finalized in the coming weeks if they prove to be conclusive, according to the people, who spoke on condition of anonymity. The size of the transaction was not immediately known.

OCM India was the first investment in the country by the private equity (PE) fund founded by billionaire investor and current US commerce secretary Wilbur L. Ross Jr. The PE fund bought the stake from the company’s lenders for close to $37 million in cash in 2006.

Founded in 1924, OCM India Pvt. Ltd (formerly known as OCM India Ltd) started as a textile manufacturer and forayed into worsted fabric in 1972. The company, which has a manufacturing facility in Amritsar in Punjab, is known for its tweed and jacket suiting materials.

Requests for comment sent to WL Ross & Co., Shandong Ruyi and OCM India remained unanswered until the time of going to press.

A senior OCM India official, who declined to be named, said, “WL Ross is in talks with potential buyers to sell its entire stake and is currently evaluating bids.”

The acquisition of OCM India was part of WL Ross’s global push into the textile sector in 2003 when it bought Cone Mills and Burlington Industries to create one of the largest textile companies in the world, International Textile Group (ITG), with investments in the US, Latin America, China, Vietnam and Nicaragua. ITG’s products include denim, synthetics, worsted wool and cotton fabrics for apparel and interior furnishings, which are produced, marketed and sold globally. In 2016, ITG was acquired by Platinum Equity from WL Ross & Co. OCM India was not part of ITG.

OCM India’s acquisition was the first major buyout in India by a global distressed assets investor. WL Ross subsequently also invested in domestic low-cost carrier SpiceJet, when it bought a 27% stake for Rs345 crore. The investor made a profitable exit in two years by selling its stake to Kalanithi Maran-owned Sun Group, which has since exited the airline.

Although the PE fund has stayed away from further India investments, Mint reported last March, WL Ross is once again looking at deals in the distressed assets space in India and has been in talks with promoters and banks for turnaround opportunities.

Shandong Ruyi Science and Technology Co. Ltd is already present in India and has a joint venture with Reliance Industries Ltd (RIL). The companies tied up in 2014 to bring together RIL’s Vimal brand and Ruyi’s worsted suiting brand Georgia Gullini. As part of the agreement, RIL transferred its textile business to a newly incorporated company while remaining the majority stakeholder.

Founded in 1972, Shandong Ruyi group is one of the largest textile makers in China. Based in Jining, Shandong, the group also has a presence in North America, Europe, Japan, Australia and New Zealand. It has partnerships with global players such as Itochu, Japan, and owns or operates well-known global brands such as Taylor & Lodge and Harris Tweed.

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