The Associated Cement Companies Ltd will sell its refractory business to ICICI Venture for Rs 257 crore (Rs 2.57 billion).
ACC chairman Tarun Das said: "The company wants to exit from the refractory business simply because it does not come under the core activity, which consists of cement and concrete business."
The ACC board on Wednesday approved the decision to sell the refractory business. The company will soon seek the shareholders' approval for the proposed selloff at an extra ordinary general meeting. It held its 69th annual general meeting.
Sources close to the deal said ICICI Venture would set up a separate company for the refractory business, which would be run by professionals and would be sold at a later stage.
"It will not be in a hurry to pull out of the company. First, it will earn the dividend on its investment and then start scouting for a buyer," they added.
ICICI Securities advised ICICI Venture on the deal.
Industry sources said the refractory business was put on the block as soon as Swiss major Holcim had announced its intention to buy out ACC in a complex deal.
The world's second largest cement maker had also made it public that ACC would divest its 76.01 per cent stake in the construction company, Everest Industries. The Adani group had shown interest to acquire the company.
However, the deal did not go through as it had hit regulatory hurdles. With the sale of the refractory business, ACC would now try to pull out of Everest Industries, sources said.
The ACC stock on Wednesday closed at Rs 422.65 on the BSE, marginally higher than yesterday's closing of Rs 421.25 crore (Rs 4.21 billion).
Sources said the acquisition indicated that the buyout by private equity funds was on the rise. Earlier, ICICI Venture had bought out Infomedia from the Tata group.
