Italian government and UAE private equity firm acquire 44% stake in Titagarh Wagons unit

The Italian government and a UAE-based private equity firm have jointly acquired a nearly 44 percent stake in Firema SpA, a wholly-owned subsidiary of Titagarh Wagons, senior company officials said on Sunday.

He said the company “undertook a 20 million euro recapitalization through a new equity injection”, raising total capital to 33 million euros.

Italian government investment promotion agency Invitalia paid 10 million euros for a 30.30 percent stake, while UAE-based private equity firm Hawk Eye DMCC bought a 13.64 percent stake for 4.5 million euros, company officials said.

The remaining €5.5 million was injected by the Titagarh group of companies.

The €20 million recapitalisation has given new life to the Italian company, which will now be able to turn around and capitalise on the huge rail opportunity through Invitalia’s branding and strategic value addition, Titagarh van Deputy Chairman and Managing Director Umesh Chowdhary told PTI.

Firema, an Italian company executing railway projects in Europe, was acquired by Kolkata-based Titagarh Group in 2015.

The investment will allow Firema to grow its business, he said.

Chowdhary said the recapitalization will also help the company achieve its goal of producing 20 EMU coaches per month and become a high-quality train and coach manufacturer in Europe.

With the recapitalization, Titagarh Wagons’ stake in Firema SpA was reduced to 49.7 percent, and as a result, Titagarh Firema SpA is no longer a subsidiary of the Indian engineering firm, the official said.

Shivalik Mercantile, another Titagarh sponsor’s company, will hold a 6.36 percent stake in the Italian company, he said.

As a result, the group’s stake in Titagarh Firema SpA will exceed 56%.

The Italian company reported a loss of around 9 million euros in the last fiscal year and expects a positive EBITDA (earnings before interest, tax, depreciation and amortization) for the current fiscal year, company officials said.

He added that Firema currently has a healthy order book of 500 million euros, which is expected to be executed over the next four or five years.

(Only the title and images of this report may have been modified by Business Standards staff; the rest of the content was automatically generated from the syndicated feed.)