US global home appliances giant Whirlpool Corporation has roped in top investment bank Goldman Sachs as the sell-side advisor for the former's proposed part stake sale in listed Indian subsidiary Whirlpool of India in a bid to fast-track growth, multiple industry sources in the know told Moneycontrol.
"Goldman Sachs has been roped in and preliminary discussions as part of the stake sale process have been initiated. Management meetings have been held recently between potential suitors, including private equity funds, and the firm," said one of the persons above.
A second person confirmed the above.
A third person said that global funds like Advent International, KKR, Bain and TPG may show early interest in the deal and added that participation by overseas strategics could not be ruled out. Incidentally, Advent International has struck two home appliances deals in the past with investments in Eureka Forbes and Crompton Greaves Consumer Electricals.
All the three persons above spoke on the condition of anonymity.
On 30 January, Whirlpool of India disclosed that parent Whirlpool Corporation announced its intention to sell down its ownership interest in the former to approximately 20 per cent by mid to late 2025, by way of one or more market sales.
At the end of day's trade on April 21, Whirlpool of India's market cap stood at Rs 13,881 crore. Whirlpool Corporation holds 51 per cent stake and a sell down to approximately 20 per cent stake, would mean dilution of 30 per cent , which translates into a valuation of Rs 4,164 crore at current levels.
Interestingly, Whirlpool Corporation expects to remain the largest shareholder following completion of the anticipated sell-down, the January disclosure had added.
When contacted , Goldman Sachs , Advent International, Bain Capital, TPG and KKR declined to comment. Email queries sent to Whirlpool of India remained unanswered at the time of publishing this article and reminders have been sent.
A spokesperson for Whirlpool Corporation said -
"We anticipate reducing our stake in Whirlpool of India by ~30% by mid to late 2025. Whirlpool of India will have increased flexibility, enabling it to focus on accelerated growth and investing in initiatives to drive long-term sustained growth. Whirlpool of India can leverage their well capitalized position to accelerate their growth initiatives which is good for the India shareholder, but has not been valued by the U.S. shareholder.
Read More: Whirlpool promoter entity plans to sell up to 24% stake worth $451 million
The Whirlpool of India management team has been doing an excellent job growing the business and building our Whirlpool brand in India through new and innovative products. We have complete confidence in the Whirlpool of India management team and their ability to continue to build on the business performance and create shareholder value. Whirlpool of India continues to be an attractive business, with strong fundamentals to accelerate growth.
The announcement on our January earnings call of the intention to sell part of our stake in the business has generated significant interest, including from large, third-party investors. Whirlpool Corporation will evaluate all potential opportunities to maximize the value to Whirlpool of India business and to Whirlpool Corporation."
In February 2024, Whirlpool Corporation sold as much as 24 per cent in Whirlpool of India via the block deal route to pare debt. The Indian unit's share price has dipped by 53.48 per cent over the last six months, but recovered , to rise by 11.39 per cent in the last month.
For FY24, Whirlpool of India posted revenues of Rs 6,332 crore and a net profit of Rs 167 crore.
"In FY 2023-24, the consumer durables industry grew single digit, driven by premiumization, after experiencing a significant rebound of about 18 per cent in FY 2022-23, indicating a post-pandemic recovery. Growth this fiscal was primarily fueled by the focus on premium products, such as appliances featuring smart technologies, larger capacities, and energy-efficient attributes," the firm's MD Narasimhan Eswar said in the firm's last annual report.
He added, "Air conditioners, a low penetration category, showed robust double-digit growth, while washers, which have slightly higher penetration, grew at a mid-single digit rate. Conversely, the refrigerator industry, the most penetrated category, hardly grew, facing considerable challenges during the year. During the financial year, the success of Elica PB Whirlpool cooking business, with notable revenue growth of 8 per cent and profit before tax growth by 40 per cent, added to the overall positive performance of the company."
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