Jain Irrigation to merge international biz with Temasek-backed Rivulis

In a step designed to cut consolidated debt, Jain Irrigation Systems Ltd (JISL) will merge its International Irrigation Business (IIB) with Temasek-owned Rivulis Pte Ltd. The cash proceeds will be used to pay off Rs 2,700 crore of overseas debt.

IIB’s enterprise value is pegged at Rs 4,200 crore. After the transaction, Jain irrigation will hold 22 per cent stake (valued at Rs 1,300 crore) in Rivulis. About Rs 2,700 crore will be used to pay off overseas debt and Rs 200 crore will be used to settle receivables, Anil Jain, Managing Director of Jain Irrigation told the media.

The JISL stock closed 20 per cent higher at Rs 37.5 per share on BSE.

Jain International Trading BV, a wholly owned subsidiary of Jain Irrigation, and Rivulis have entered into definitive transaction agreements, the company said in a statement.

The transaction is subject to regulatory approvals and other customary closing conditions, and is expected to be completed by early 2023.

Jain said the consolidated net debt of JISL was Rs 6,000 crore at the end of March 2022. Of this, Rs 3,300 crore is a domestic debt and Rs 2,700 crore is overseas. JISL already restructured its domestic debt in March 2022.

The merged entity will have $750 million in revenues. Jain Irrigation will hold 22 per cent in the merged entity while 78 per cent will be with Singapore’s Sovereign Wealth Fund (SWF) Temasek.

Jain Irrigation will also get to release the corporate guarantee given by Jain Irrigation, India of Rs 2,275 crore to bondholders & IIB lenders.

Jain Irrigation will have a 10-year supply agreement with the merged entity, which would drive revenues and profits. There will be no-compit pact with Rivulis. But JISL will continue to supply products in the Indian subcontinent aka neighbouring countries, Jain said.

The merged entity will be dual headquartered in Singapore and Israel and will continue to be named Rivulis Pte. Ltd.  

For the purposes of corporate branding, the company will be represented as “Rivulis (In alliance with Jain International)”. Richard Klapholz, the current Rivulis CEO, will continue to lead the Company. Top senior associates from the IIB are expected to continue in leadership roles across the Company.

Goldman Sachs acted as financial advisor, Baker McKenzie acted as legal advisor and PWC acted as tax and diligence advisor to JITBV for the transaction.