Toshiba expands in India with 3i’s Vijai Electricals acquisition
Japan’s Toshiba Corporation will acquire the majority of Vijai Electricals’ electricity transmission and distribution (T&D) business for approximately $200 million. 3i bought a minority stake in Vijai for $25.8 million in 2006.
The T&D business generates annual sales of $250 million, according to a Toshiba statement. It products include transmission transformers and switchgear, as well as power transmission and distribution lines. Toshiba expects the market size to grow to more than $4 billion by 2015.
The transaction is expected to close in November.
Vijai was established in 1973 as a manufacturer of electricity distribution transformers. When 3i invested in 2006, the company had committed $70 million to expand its T&D unit.
Intense price competition and continued delay in payment, especially from the state electricity boards, adversely affected Vijai's liquidity and in 2011 it fell behind on term loan repayments. The company's corporate debt restructuring package was approved in March 2012.
Toshiba has created a new local company to absorb the acquired business, which will be integrated into the Japanese firm's design and manufacturing technologies for T&D systems. It will be a core production base for expanding its T&D business in India and globally, alongside other bases in Japan, China, Brazil, Russia and Southeast Asia.
There are also plans to enter other growth markets in India, including power electronics systems.
"Vijai's products and sales channel provide us with an ideal fit for our T&D business in India and beyond," said Takeshi Yokota, corporate vice president of Toshiba. He added that the company aims to secure a 20% market share in India within five years.
3i announced earlier this year that it would stop investing in India as its $1.2 billion India Infrastructure Fund has not delivered the growth expected.
The 3i India Infrastructure Fund portfolio includes power sector investments in Adani Power, Ind-Barath Utkal and GVK Energy; Supreme Roads, KMC Roads and Soma Enterprise for roads; and Krishnapatnam Port.
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