Advent and Temasek make $251 mn open offer for Crompton Greaves Consumer

Private equity investor Advent International Corp and Temasek Holdings Pvt. Ltd, an investment arm of the Singapore government, have jointly launched a mandatory open offer to buy additional 26% equity stake in newly-listed Crompton Greaves Consumer Electrical Ltd (CGCEL) for about Rs 1,695 crore (around $251 million), as per a SEBI disclosure.

The offer is made at a price of Rs 104 a share for up to 162,953,997 equity shares, constituting to 26% stake through Advent International Corp's Amalfiaco and Temasek's MacRitchie Investments Pte Ltd.

The current market price of CGCEL is Rs 136.95 a share. Therefore, at Rs 104 a share, the open offer is unlikely to find many takers.

In April last year, Avantha Group agreed to sell its entire holding of 34.37% in the demerged consumer products business of Crompton Greaves to private equity investors Advent International and Temasek for Rs 2,000 crore.

The two firms have already paid the amount in advance in lieu of shares to Crompton Greaves. However, the transaction is yet to be completed. 

Besides, the two PE firms agreed to pay an aggregate fee of Rs 15.85 crore to Avantha as exclusivity fee for the transactions. Of this amount, while Advent paid Rs 10.3 crore, Temasek made a payment of Rs 5.5 crore.

Post the requisite approvals, CGCEL was listed on BSE and NSE on May 13.

Under the consumer business, it manufactures products ranging from fans, light sources and luminaires, pumps and household appliances such as geysers, mixer grinders, toasters, irons and electric lanterns.  

The demerger was part of the group's plans to create independent growth opportunities for its two large but significantly different businesses - power, industrial and automation, which is a B2B business, and the consumer products business, which is B2C. 

Avantha Group also runs India's largest paper firm Ballarpur Industries, besides energy generation company Avantha Power. It also has several small and medium-sized firms in processed food, IT, chemicals, etc.

HSBC Securities and Capital Markets India Pvt. Ltd and Barclays Bank Plc are the joint managers to the open offer.

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