IVFA in part-exit from India's UEM as Toshiba raises stake

The Japanese multinational said in a statement that it had acquired a 54% interest in UEM from IVFA and Krishan Kshetry, the company's founder. Both groups remain involved as minority shareholders and UEM's existing management team will continue to run operations.

IVFA bought a 70% stake in the company for around INR1.2 billion ($19.6 million) and was approached by Toshiba regarding a sale around two years ago. The Japanese company had expanded into water and wastewater management in China and Indonesia and was looking to enter India. IVFA was not ready to exit so they agreed that Toshiba would take a 26% stake.

The investment comprised fresh equity because UEM required additional capital for growth, and IVFA's holding was diluted to 51%. The deal reportedly gave the PE firm a 2.7x paper gain on its investment. At the time, UEM was said to be generating annual revenue of $70 million, having seen compound annual growth of 50% over the previous five years.

Toshiba claims that, since its investment, synergies between the two companies have resulted in UEM winning additional orders for treatment plants from Japanese groups operating in India and other clients abroad. As majority owner, it plans to deepen UEM's exposure to the sector globally.

The company has already executed projects in more than 30 countries across Southeast Asia, North America, Central America and Africa, as well as in India. It provides single-source services from engineering and design to construction and installation of treatment facilities. UEM's technical expertise includes zero liquid discharge systems, where water is recycled completely without a drop being wasted.

Toshiba pegs the global water market at over $500 billion and growing 6-7% annually. Demand for water is projected to overshoot supply by 40% in the next 20 years, with half of the world's population living under conditions of "water stress" by 2030. 

"Over the last one year, IVFA has had a good working relationship with Toshiba on overseeing the business and we believe that Toshiba is a great partner who can take UEM to the next level of becoming a global leader in water treatment," Vishal Nevatia, managing partner at IVFA, said in a statement.

IVFA recently closed its fifth India-focused fund at the hard cap of $700 million. It invests in profitable business with revenues of $25-100 million that need to be institutionalized.

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