Globally, the race to acquire knowledge and research capabilities is hotting up because barriers are coming down and new technology and brands are the only drivers of value in commodity plastics business. A bid by the Chatterjee Group for Dutch petrochemicals giant Basell Polyolefins in consortium with leading Indian private equity fund ICICI Ventures and a host of US-based investors could be a good example of this.
Basell has almost 1,000 patents and thousands of branded inventions in use worldwide. Basell has cutting-edge technology in petrochemicals and rare catalysts used in process industries worldwide. While thousands of patents and inventions ensure healthy fundamentals, Basell is on sale because the beleaguered Shell is keen to liquidate its non-energy holdings while BASF is refocussing on its core chemicals business. The sale of the Shell-BASF stake in Basell represents an opportunity to become a global repository of know-how and very advanced research facilities besides a booming business model.
The Chatterjee Group (TCG), promoter of Haldia Petrochemicals Ltd (HPL), plans to take advantage of this. TCG plans to become a global supplier of petrochemicals technology through the acquisition of the knowledge and research & development assets of Basell. If it succeeds, the TCG consortium will be the first Indian entity to acquire the knowledge and research & development assets rather than the physical infrastructure or brands of a global entity. This could also be the largest deals ever signed by an Indian consortium- with sale value estimated at EURO 4.2 billion (Rs 22,000 crore) by global petrochemical analysts. However, in view of the deal’s big size, Purnendu and ICICI would only be picking minority stakes in the company, leaving the majority for the yet unidentified US-based funds.