Private equity firm Actis plans to sell its stake in Indian lamp maker Halonix Ltd to a strategic investor, two sources with direct knowledge said on Tuesday, in a deal that could be valued at $56 million.
Actis, which has its head office in London and specialises in investing in emerging markets, had invested in Halonix, a maker of compact fluorescent lamps for general lighting and halogen lamps for the automotive sector, in 2006. Private equity investment in India has picked up momentum in recent months with deals worth $2.05 billion in the first half of this year as compared to $964 million in the same period last year, according to Thomson Reuters data.
Private equity firms typically make minority investments in India, where entrepreneurs are often reluctant to sell out and where full buyouts are rare.
Actis, which owns 66 percent of Halonix, has mandated Indian investment bank Enam Securities for finding a buyer, said the sources who declined to be named as they were not authorised speak to the media before a public announcement.
An Actis spokesman said the company would not comment on market speculation. Officials at Halonix could not be immediately reached by Reuters for comment.
Analysts say that the sharp rally in the Indian stock market, which has soared nearly 14 percent over the last five weeks, could see many private equity firms exiting from their portfolio companies through an IPO or sale to a strategic investor.
Shares in Halonix, which has a market value of about $85 million, ended 0.4 percent lower on Tuesday in the main Mumbai market that fell 0.3 percent.
Halonix is a market leader in automotive halogen bulbs in India with more than 50 percent market share in passenger vehicles and more than 80 percent in motorcycles, according to information available on the company’s website.
The company, which exports to more than 75 countries, has a production capacity of more than 60 million units per annum in automobile halogen bulbs and this is expected to be increased by about 25 million units over three years, it said. Sources said that the company was likely to hive off its loss-making non-automotive lamps business under a unit, Halonix Technologies, which may be sold to Actis in a separate deal. “Actis has the finances and experience to invest in Halonix’s non-automotive business unit and turn it around,” said a source.
Private equity firms Actis and Sequoia Capital are reportedly planning to sell their controlling stake in India’s unlisted Paras Pharmaceuticals. Morgan Stanley is advising Actis and Sequoia on the transaction.