Avantha Holdings, the privately held holding company of Gautam Thapar-led Avantha Group, has sold 8.3 per cent or a fifth of its 42.67 per cent stake in the group’s most valuable asset, public listed engineering company Crompton Greaves for Rs 1,001.57 crore ($162 million) on Thursday.
The shares were sold in a bulk deal on NSE, part of which was bought by investment entities under Goldman Sachs and Merrill Lynch.
This comes days after the group said it is likely to sell a part of its stake in Crompton Greaves Consumer Products Ltd, the proposed demerged consumer business division.
Last month, the company had obtained its board’s approval to demerge its consumer products business into a separate listed firm Crompton Greaves Consumer Products Ltd.
The demerger proposal was part of the group’s plans to create better growth opportunities for its two large but significantly different businesses – power, industrial & automation which is a B2B business, and the consumer products business which is B2C.
Crompton Greaves operates three business groups – power systems, industrial systems and consumer products. Under the consumer product business, Crompton Greaves manufactures products ranging from fans, light sources and luminaires, pumps and household appliances such as geysers, mixer grinders, toasters, irons and electric lanterns.
It has made a dozen of acquisitions over the past decade starting with Pauwels (2005), Ganz (2006), Microsol (2007), Sonomatra (2008), MSE Power System (2008), Power Technology Solutions (2010) and three units of Nelco (2010). More recently it acquired compact fluorescent (CFL) manufacturing business of Himachal Pradesh-based Karma Industries for $2.6 million.
Avantha Group also runs India’s largest paper company Ballarpur Industries, besides energy generation company Avantha Power. It also has several small and medium size companies in processed food, IT, chemicals, etc.
The group has been laden with debt and has been looking to sell assets to deleverage the balance sheet. It had also scooped up funding from Apollo Global and ICICI Venture’s joint special situations fund AION some time back.
Avantha Group has also just struck a deal to sell one of its thermal power units under Avantha Power for an enterprise valuation of Rs 4,200 crore ($680 million).
Crompton Greaves owns 23.14 per cent stake in Avantha Power.
Shares of Crompton Greaves crashed to end the day at Rs 191.95 per share, down 6.11 per cent on the BSE in a flat Mumbai market on Thursday.