Yacht Trade and Finance Limited, a financial investment company based in Assam, has recently made a significant move to strengthen its portfolio by acquiring 30 lakh Compulsorily Convertible Preference Shares (CCPS) worth Rs. 3 Crore. This acquisition is seen as part of the company's strategy to diversify its investments and boost its assets through strategic decisions.
Company Overview:
Incorporated in 1989, Yacht Trade and Finance Limited operates in the financial investment sector, focusing on diversifying into various financial assets and related business activities. Over the years, the company has seen fluctuating turnover, with the most recent figures for FY 2023-24 standing at Rs. 64,300. The turnover for the past three financial years is as follows:
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FY 2023-24: Rs. 64,300
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FY 2022-23: Rs. 74,400
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FY 2021-22: Rs. 1,52,400
Acquisition Details:
The acquisition involves the purchase of 30,00,000 CCPS at a price of Rs. 10 each, summing up to Rs. 3 Crore. This transaction is not a related party deal and has been conducted on an arms-length basis. The CCPS acquired will be converted into equity shares only after a minimum period of 7 years, with a maximum conversion period of 20 years. However, there is no restriction on the transfer of the CCPS, providing the company flexibility in its investment approach.
Purpose of the Acquisition:
The investment in CCPS serves as a tool to strengthen the financial standing of Yacht Trade and Finance Limited. The company has chosen to transfer its loans and advances, as listed on its balance sheet, to make this investment. The purpose is to leverage its capital into diversified assets rather than acquiring any control or substantial equity stake in the target company at this stage.
It’s crucial to note that Yacht Trade and Finance Limited is not aiming to control the target company through this investment. The company has no intention of involving itself in the management or decision-making processes of the acquired entity. As such, the company’s stake in the target entity will remain passive for the foreseeable future.
Regulatory Approvals and Timeline:
There are no specific regulatory approvals required for this acquisition. The timeline for the completion of this deal is set with the allotment of CCPS scheduled for March 31, 2025. This reflects a long-term commitment to securing the financial stability of the company while taking calculated investment steps.
Strategic Impact:
The acquisition of CCPS is expected to provide Yacht Trade and Finance Limited with greater financial flexibility, allowing the company to participate in the growth of its diversified assets without immediately seeking control over the target business. This strategy is in line with its goal of enhancing its asset base over time, rather than making a direct impact on the day-to-day operations or management of the target company.
In summary, this move by Yacht Trade and Finance Limited highlights a cautious but strategic approach towards investment. By focusing on non-cash investments like CCPS and opting for long-term conversion plans, the company positions itself for future growth while maintaining its independence and controlling interest in the operations of the target entity.
By focusing on asset diversification and strategic investments, Yacht Trade and Finance Limited is preparing for future growth while maintaining a careful approach to its financial strategies.
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