SET-listed auto parts maker Aapico Hitech Plc has announced an additional investment in Indian holding company Sakthi Global Auto Holdings Limited (SGAH) of US$65 million (2.14 billion baht).
"Aapico has sighted a good opportunity to gain a stronger footprint in the global market through this investment," said Yeap Swee Chuan, president and chief executive.
"Aapico will have general greater management participation in SGAH, offering more support and necessary controls in weak areas."
The company submitted a letter to inform the Stock Exchange of Thailand that the $65-million total investment is aimed at supporting and strengthening the strategic partnership and to enhance the synergies between Aapico and SGAH.
Of the total budget, $25 million will be allocated for 4,977 newly issued ordinary shares in SGAH, representing 24.9% of all registered shares of SGAH.
SGAH shares will be owned by Aapico and its subsidiary, Aapico Investments.
The remaining $40 million (1.31 billion baht) will go to loans from Aapico to SGAH with an interest rate of 10% per year for a period of three years.
The $40-million loan will be secured by personal guarantor Manickam Mahalingam, the owner of Sakthi Group, and Lalit Kumar, chief executive of Sakthi Automotive Group USA, including the pledge of shares in SGAH and its subsidiary to Aapico.
After Aapico completes this transaction, its direct and indirect stake will increase from 25.1% to 49.99% of all registered shares in SGAH.
In May 2017, Aapico made its first investment in SGAH for $100 million.
Under the deal, Aapico spent $50 million to buy 2,510 newly issued ordinary shares, equivalent to 25.1% of SGAH.
The other $50 million was a synthetic convertible loan to SGAH, with an interest rate of 20%.
Aapico reported total revenue from January to June rose by 11.4% to 8.75 billion baht, driven by higher sales, higher interest income from the SGAH loan, and unrealised gains in the foreign currency exchange rate.
Revenue growth for the period was also driven by auto parts and car dealerships.
Aapico posted a net profit of 702 million baht in the first half, up by 30.2% from the same period last year.