New Delhi, Nov 1 : India's private sector defence shipyard Pipavav Thursday signed an agreement under which Swedish defence major Saab will invest $37.5 million (250 million Swedish Krona/Rs.20 crore) in it.

The investment is being made in the form of shares that will be issued through a directed issue, which is dependent on approval from an extraordinary general meeting of Pipavav Offshore and Defence Engineering Ltd (Pipavav) later this year.

"After the investment, Saab will hold approximately 3.5 per cent of the capital and votes in Pipavav," a press release issued by Saab from Stockholm said.

The investment agreement follows a memorandum of understanding signed on Aug 24 between the two companies concerning a strategic investment in Pipavav.

Both companies had also signed a technical partnership agreement, a continuation of the ongoing co-operation between the companies and covering details about the format for continued relationships and relevant projects.

"Finalisation of the investment is expected to be made within 3 months, under the condition it meets the necessary approval of the shareholders meeting of Pipavav and government approvals," the release said.

Pipavav is engaged in the naval domain in India and intends to expand to other defence areas too.

The co-operation with Pipavav offers a platform to Saab through which it wants to grow in the Indian market.

The two companies earlier jointly formed the Combat System Engineering Group, which analyses naval combat system design and architecture.

The two companies are also exploring next generation combat management systems for the Indian Navy and the Indian Coast Guard.


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