Under the proposed arrangement, Shalimar Paints will acquire Hella Infra Market through a share-swap transaction. Existing shareholders of Hella Infra Market will receive equity shares and compulsorily convertible preference shares (CCPS) of Shalimar Paints as consideration.
The deal, approved by the paints maker’s board on August 12, remains subject to shareholder and regulatory clearances. Hella Infra Market could become an unlisted material subsidiary of Shalimar Paints following the transaction.
The proposed structure will significantly alter the scale and business profile of Shalimar Paints.
Hella Infra Market was valued at nearly ₹25,000 crore in the private market, compared with a market capitalisation of less than ₹750 crore for Shalimar Paints.
As part of the transaction, Shalimar Paints plans to issue equity shares worth around ₹3,544.69 crore on a preferential basis to promoter and non-promoter allottees.
The company will also issue up to 81.12 crore CCPS at ₹85 apiece, aggregating to approximately ₹6,895.22 crore. Both issuances will form part of the non-cash consideration for the proposed share swap.
The eventual swap ratio will be determined based on valuation reports and will require shareholder approval.
A reverse merger provides a way for a private company to go public if it doesn’t meet the requirements to list on a stock exchange. The company gets on the exchange by going through a back door. This process is sometimes referred to as a reverse takeover, or reverse IPO.
Separately, Shalimar Paints has received board approval to raise up to ₹1,000 crore through a qualified institutional placement (QIP).
The proposed fundraise is expected to provide additional capital to the enlarged business and support its expansion across manufacturing, distribution and technology.
The transaction would bring together Shalimar Paints’ manufacturing footprint and listed-company status with Infra.Market’s technology-led distribution network across the building materials segment.
Infra.Market operates across categories including ready-mix concrete, aggregates, steel, tiles and other construction materials, using technology to manage projects and identify cross-selling opportunities.
For Infra.Market, the proposed arrangement provides an alternative to a conventional IPO for accessing public markets.
The deal would also transform Shalimar Paints from a relatively small listed paints company into a broader building materials platform, given the significant difference in the valuations of the two businesses.
The Shalimar Paints board has proposed convening an extraordinary general meeting to seek shareholder approval for the transaction. The final swap ratio and other transaction details will be disclosed following the required valuation and regulatory processes.
