Sunil Mittal and Warburg Pincus enter into exclusive talks for Haier India stake buy; announcement likely this month

Sunil Mittal and Warburg Pincus enter into talks for Haier India stake buy; announcement likely this month

A consortium including Bharti Enterprises Founder and Chairman Sunil Mittal and US private equity major Warburg Pincus has entered into exclusive negotiations with Chinese consumer appliances giant Haier Smart Home Co to pick up a substantial stake in its India arm, multiple industry sources in the know told Moneycontrol.

"The exclusivity period is on currently and an official announcement on the proposed transaction is likely this month. The deal structure was a bone of contention earlier with many suitors but now the plan is for the incoming Mittal-Warburg Pincus combine to pick up a 49 percent stake with the Chinese parent expected to also hold 49 percent stake. The balance 2 percent stake will be with the employees and both parties, the parent and the consortium, will exercise joint control going ahead, keeping board seats and other aspects in mind," said one of the persons quoted above.

According to a second person familiar with ongoing discussions, "Haier is a good commodity play, has a strong supply chain and a healthy market share in every category. Mittal, who is looking to participate via his family office, has had a long-standing relation with Warburg Pincus, which was one of the early investors in Bharti Airtel and the consortium showed strategic intent to be there for the long term. "

"Investment bank Citi is the sell -side advisor. The Indian unit of Haier is an IPO candidate in the next two years once the new investors come in," a third person elaborated.

All the three persons quoted above spoke to Moneycontrol on the condition of anonymity.

Email queries to Bharti Group, Haier China and the Indian arm were left unanswered at the time of publishing this article. Reminders have been sent and this article will be updated as soon as we hear from the parties. When contacted, Warburg Pincus and Citi declined to comment.

Earlier reports have pegged a valuation of around $2 billion for Haier Appliances India Pvt Limited, which competes with the likes of Samsung, LG and others.

On May 8, Bloomberg reported that the Mittal-Pincus team is in advanced talks to pick up stake in Haier India. Sunil Mittal and his family have a net worth of $28 billion, according to the Bloomberg Billionaires Index.

In the last month, the share prices of listed players like Whirlpool of India, Voltas Ltd and Crompton Greaves Consumer Electricals have risen by 7.5 percent, 3.3 percent and 7.2 percent respectively.

A closer look at Haier India

According to its LinkedIn page, Haier India is a 100 percent subsidiary of Qingdao, China-headquartered Haier Group, one of the fastest-growing consumer durables companies in the world.

"Haier is the world’s no. 1 brand of major appliances for the 15th consecutive year, as per Euro-monitor International (2023 Volume share data). Haier is also the world’s no.1 brand in refrigeration appliances, home laundry appliances, freezer and wine cellars," the LinkedIn page says.

The company initiated its commercial operations in January 2004 and since its inception, Haier has launched products in all major categories including refrigerators, air conditioners, washing machines, panels (LED TVs), water heaters, commercial refrigerators, wine cellars and microwave ovens. The firm has established a dealer network with a presence in more than 6,500 outlets all over the country.

According to a PTI report in March, in 2024, Haier India reported a 36 per cent growth in revenue at around Rs 8,900 crore, crossing the billion-dollar sales mark. For the current year, the firm expects revenue to cross Rs 11,500 crore.

"And subsequent to that, every year, we are looking around Rs 2,000 to 2,500 crore plus. So we have big plans. And we see a big opportunity in India. When you see the economy GDP, which is doing very well, next is the penetration of the product, which is very low when we compare it to our global counterparts," NS Satish, President, Haier Appliances India told PTI.

The Haier India stake sale is not the only M&A brewing in the sector.

On April 21, Moneycontrol reported that US global home appliances major Whirlpool Corporation had roped in Goldman Sachs as the sell-side advisor for the former's part stake sale in listed Indian subsidiary Whirlpool of India, in a bid to fast-track growth.

Global funds like Advent International, KKR, Bain and TPG may show early interest in the deal and participation by overseas strategics could not be ruled out, the report had added.

On June 6, Moneycontrol was the first to report that a consortium including Bharti Enterprises Founder and Chairman Sunil Mittal and US private equity major Warburg Pincus had entered into exclusive negotiations with Chinese consumer appliances giant Haier Smart Home Co to pick up a substantial stake in its India arm.