Avantha Group will sell its entire holding of 34.37 per cent in demerged consumer products business of Crompton Greaves to private equity investors Advent International and Temasek for Rs 2,000 crore.
The two private equity firms will then make an open offer for additional shares to gain ownership of the consumer unit of the Avantha group — Crompton Greaves Consumer Electricals (CGCEL) — which will be listed on the National Stock Exchange and Bombay Stock Exchange.
The deal values the consumer products arm, Crompton Greaves Consumer Electricals (CGCEL) at an enterprise value of Rs 6,600 crore.
In February this year, Crompton Greaves’ board had approved fully demerger of its consumer products business and said shareholding of CGCEL upon completion of the demerger will mirror the shareholding of Crompton Greaves.
“…we propose to divest our entire proposed shareholding in CGCEL amounting to approximately 34.37 per cent of the total issued and paid up share capital of CGCEL, to one or more special purpose vehicles (SPVs) managed by Advent and a wholly-owned subsidiary of Temasek for an aggregate consideration of Rs 2,000 crore,” Avantha said in a BSE filing by Crompton Greaves today.
Temasek will be an independent co-investor alongside Advent in CGCEL.
Under the terms of agreement, CGCEL will be demerged from CG into a standalone company and will consequently be listed on the NSE and BSE.
Advent and Temasek will acquire ownership in CGCEL by purchasing shares in the firm from Avantha Holdings following the demerger of the consumer products business from CG and the listing of CGCEL.
Thereafter, Advent and Temasek will make an open offer for additional shares of CGCEL in compliance with takeover regulations.
“The transaction values CGCEL at an enterprise value of Rs 66 billion (Rs 6,600 crore), Advent added.
Avantha Group Founder and Chairman Gautam Thapar said: “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.”
“CGCEL is an attractive business that we believe will thrive as a standalone company,” said Shweta Jalan, Managing Director at Advent International.
The transaction is expected to be completed in the first quarter of 2016.
The company said that the transaction is subject to closing conditions and receipt of all statutory and other approvals, including the successful demerger of CGCEL from CG and approval from the Reserve Bank of India and Competition Commission of India.
CGCEL’s consumer products ranges from fans, lamps and luminaires to pumps and household appliances such as water heaters, mixer grinders, toasters, irons and electric lanterns.