Temasek Agrees to Purchase 4.9% Stake in Godrej Consumer for $136 Million

Temasek Holdings Pte (TMSK), Singapore’s state-owned investment comapny, agreed to buy a 4.9 percent stake in India’s Godrej Consumer Products Ltd. (GCPL) for 6.85 billion rupees ($136 million).

Godrej will issue 16.7 million new preferential shares to Baytree Investments (Mauritius) Pte, a unit of Temasek, P. Ganesh, executive vice president of finance at Godrej Consumer, said in a phone interview today. Godrej will sell the shares at 410 rupees a share, the company said in an exchange filing. Godrej’s shares rose 0.7 percent to 402.8 rupees in Mumbai trading yesterday.

Temasek, which managed S$193 billion ($152 billion) as of March 2011, has transformed itself from a holder of stakes in companies controlled by Singapore’s government to an investor with more than two-thirds of its assets based abroad.

Temasek has invested more in emerging markets including China, India, Brazil and Mexico, as developing nations led the global economy’s recovery from its worst recession since World War II, according to its 2011 review. Godrej Consumer’s net income has more than quadrupled in the past three years amid rising consumer spending in the world’s second-most populous nation.

“The growth of the Indian consumer sector and good corporate governance of Godrej must have lured Temasek,” said Arun Kejriwal, a director at Mumbai-based Kejriwal Research & Investment Services. “Godrej wants to be a leader in India as well as be aggressive in smaller emerging markets to diversify its risk.”

Cosmetica Nacional Stake

Separately, Godrej will buy a 60 percent stake in Chile’s Cosmetica Nacional, it said in an exchange filing. Godrej’s Ganesh declined to comment on the value of the deal.

The company will fund the deal, which it will complete by April, using “low-cost overseas debt,” the company said in a statement. Godrej will increase its stake to 100 percent in the next three to five years. The acquisition will increase earnings per share within its first year, the company said. The Mumbai- based company is controlled by billionaire Adi Godrej.

Godrej has announced eight acquisitions since January 2010 as it seeks to increase its overseas sales. The BSE Fast Moving Consumer Goods Index rallied 9.5 percent last year, while the BSE India Sensitive Index, or Sensex, tumbled 25 percent.

Godrej’s profit in the three months ended December 31 increased 41 percent to 1.67 billion rupees from 1.19 billion rupees in the same period a year earlier, the company said in an exchange filing today.

To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net; Malavika Sharma in New Delhi at msharma52@bloomberg.net

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net; Stephanie Wong at swong139@bloomberg.net

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