Nalanda Capital Pte Ltd, a Singapore-based private equity firm focused on public markets, has acquired 2.95 per cent stake in lighting and electrical products maker Havells India Ltd. The stake was picked over the past 4-5 months for Rs 120-130 crore, according to VCCircle estimates. Private equity major Warburg Pincus holds nearly 14 per cent stake in Havells.
For Nalanda Capital, which has $875 million under management across two funds, this is the third known investment in a Warburg Pincus-backed company. Other two deals include business process outsourcing firm WNS Holdings and gem & jewellery exporter Vaibhav Gems. Incidentally, Nalanda was founded by former Warburg Pincus India co-head and MD Pulak Prasad.
The share price of Havells closed at Rs 423 on Wednesday, up 1.28 per cent in a Mumbai market down 0.63 per cent. Nalanda Capital had picked up the stake during the July-September quarter when the share price of the company was trading between Rs 316 and Rs 370 per unit. This implies that Nalanda is already sitting on 15-20 per cent gain on its investment.
Havells had acquired Sylvania’s lighting business for $300 million four years ago, catapulting it at one shot as the world’s fourth largest manufacturer of lighting products. But the company faced grim prospects since its key European business had to bear the brunt of the economic slowdown in 2008 and debt from the transaction. However, the firm undertook a massive restructuring in the following year and recently turned around its overseas operations.
Havells reported 21.5 per cent increase in sales to Rs 2,882 crore, with profit after tax rising 5.9 per cent to Rs 242 crore in FY11.
“We believe Havells is well on track to beat its FY12 guidance of 10-11 per cent growth in consolidated revenue, given that it has already achieved 17 per cent year-on-year growth during H1 FY12. Our EPS estimate for FY12 is Rs 28.8 (up 31 per cent) and Rs 35.5 (up 23 per cent) for FY13,” said a Motilal Oswal report, putting the price target of the company at Rs 495 per share.
Earlier this year, SAIF Partners exited Havells with over 3x returns.