Essar's Black Box secures Rs 410 crore in funding; to invest in data centres, network infra

Global digital infrastructure solution provider, Black Box, announced it has secured Rs 410 crore through a preferential issue to boost growth and expansion in the digital infrastructure sector.

The board of directors approved the issuance of 98,32,123 fully convertible warrants at Rs 417 per warrant, totaling Rs 410 crore. Each warrant can be converted into one equity share of Rs 2 each at a premium of Rs 415 within 18 months from the date of allotment, as per SEBI ICDR Regulations.

The funding round has garnered Rs 200 crore from existing promoters of the company. Additionally, Rs 200 crore have been raised from a consortium of marquee investors, including foreign institutional investors and high-net-worth individuals, and Rs 10 crore by key management personnel of the company. 

After the conversion of warrants into equity, promoter shareholding will decrease slightly from the existing 71.1 per cent to 69.8 per cent. Black Box continues to be Essar's key investment in the technology space.

Over the last couple of years, the company focused on improving margins by taking several cost rationalisation initiatives and emphasising on enhancing productivity. This has yielded positive outcomes, it said, leading to an increase in EBITDA margins and Profit after Tax (PAT). Black Box achieved EBITDA of Rs 428 crore in FY24, a growth of 59 per cent on FY23 EBITDA, and PAT of Rs 138 crore in FY24 which is 5.8x of FY23 PAT. 

The company announced that it will use the newly-raised growth capital to invest in several key areas. The company plans to expand its data centre build capabilities, and is anticipating significant growth in data centre capacity over the next 3-5 years due to the adoption of cloud and AI. Black Box aims to become a dominant player in the market by providing expanded services to hyperscalers, multi-tenant data centre operators, and large enterprise data centres. Additionally, the company will advance its network infrastructure by enhancing its solutions portfolio for enterprise customers and data centre operators. 

A portion of the funds will also be dedicated to innovation and development efforts, including advancements in cloud computing infrastructure, cybersecurity, artificial intelligence, and IoT. The investment will also support Black Box's strategic expansion into key industry verticals, with relevant technology solutions, key leadership hiring, and significant growth in its sales and business development efforts in North America and emerging markets.

Sanjeev Verma, Chief Executive Officer of Black Box Limited said that the capital will enable them to embark on an ambitious growth trajectory and enhance their digital infrastructure offerings and drive innovation in a rapidly evolving market.