US-based HNI Corp has acquired privately held Indian office furniture company BP Ergo from business historian Gita Piramal for an undisclosed amount. The deal also marks a debut advisory transaction for former head of Indian buyout team at Carlyle, Rajeev Gupta, who had formed his own advisory firm Arpwood Capital in early 2011.
Gupta had formed the firm almost 18 months ago after joining hands with Raj Kataria and Promeet Ghosh, both former Bank of America Merrill Lynch managing directors. Ghosh recently moved out of Arpwood to join Singapore’s sovereign fund Temasek as a managing director in India.
According to The Economic Times, the deal has been struck at an enterprise valuation of Rs 200 crore. The firm was established by Dilip Piramal group flagship VIP Industries in 1992. The company has plants in Nagpur in Maharashtra and Nalagarh in Himachal Pradesh.
According to VCCEdge, the financial research platform of VCCircle, BP Ergo has been clocking revenues of over Rs 100 crore annually in the recent past and even as its net margins have been under pressure, the company has been making small profit. Topline growth has also been under pressure over the last 2-3 years.
“BP Ergo will operate as a focused, stand-alone business with a unique brand position and strategy under HNI's split and focus business model. The acquisition is expected to have minimal impact on 2012 earnings,” HNI said in its release.
HNI Corporation is a NYSE-listed company providing products and solutions for the home and workplace. It is the second largest office furniture manufacturer in the world.
“BP Ergo's strong brand, significant customer base and solid manufacturing capabilities provide opportunity to drive aggressive growth in India, one of the largest and fastest growing office furniture markets in the world. Our entry into India complements our experience and success in China and supports our international strategy for expansion in fast-growing economies. This is a great opportunity to leverage HNI's broad capabilities and office furniture expertise to build BP Ergo's strong position in India, drive improved customer performance and deliver long-term profitable growth," said Stan Askren, chairman, president and CEO of HNI Corporation.
(Edited by Prem Udayabhanu)