Advent, Temasek to buy Crompton Greaves' consumer unit

The groundwork for the divestment was laid in March when the Crompton Greaves board approved the vertical demerger of its consumer products unit into Crompton Greaves Consumer Electricals (CGCEL), a wholly-owned subsidiary. Shareholders in Crompton Greaves will receive shares in CGCEL such that the ownership of the subsidiary mirrors that of the parent.

CGCEL will be listed on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). Once Advent and Temasek have completed their acquisition of the Avantha stake, they will make an open offer for control of the company - 65.46% of its shares will be publicly traded - in accordance with India takeover regulations.

CGCEL is India's leading manufacturer of fans and residential pumps. It also produces a wide range of other consumer products, including lamps, water heaters, toasters and irons. There are six manufacturing facilities and a workforce of 3,500.

The business has seen compound annual growth of 16% over the past six years and generated revenue of INR28.5 billion for the 12 months ended March 2014, up 9.8% year-on-year, while EBITDA increased 21.7% to INR3.49 billion. It has benefited from sales volume of consumer products in India outpacing GDP growth by 1.5-1.9x on an annual basis between 2002 and 2014, according to a release.

"Both Advent and Temasek have extensive financial, sector and operational expertise, and we believe they are well-positioned to support CGCEL in its next phase of growth," said Gautam Thapar, founder and chairman of Avantha.

Avantha has interests spanning pulp and paper, food processing, chemicals, power equipment and services, energy and infrastructure, and IT. Crompton Greaves, which was established in India in 1937, provides power and industrial systems as well as consumer products. It has manufacturing facilities in eight countries in addition to 20 in India, and employs 8,000 people worldwide.

Of Crompton Greaves' INR131.4 billion in sales for 2014, nearly two thirds came from power systems - transformers, switchgear, circuit breakers, vacuum interrupters, and net protection and control equipment, as well as turnkey services. Company-wide EBITDA was INR8.54 billion while net profit was INR2.44 billion, compared to a loss of INR360 million the previous year.

The CGCEL deal, which is subject to approval from the Reserve Bank of India and the country's Competition Commission, is expected to be completed in the first quarter of 2016 financial year.

Advent has been investing in India since 2007 and opened an office in Mumbai in 2009. Previous deals include Computer Age Management Services, a business process outsourcing services provider to the asset management industry which was sold to the NSE in 2014, and CARE Hospitals, the largest multi-specialty hospital chain in southern and central India.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Buyouts
• Consumer
• South Asia
• Advent International
• Temasek Holdings
• buyout
• India
• Consumer
• manufacturing