A fund managed by Reliance Equity Advisors Ltd, the private equity arm of Anil Ambani's Reliance Capital, is picking up a stake in kitchen appliances maker for Rs 100 crore ($20 million).
The deal will mark a milestone in the turnaround for the Chennai-based firm which came out of debt restructuring in 2008 is now seeing over 100 per cent growth in topline year-on-year. Butterfly Gandhimathi Appliances, which is listed on the Bombay Stock Exchange, said it is raising the funding from Reliance Alternative Investments Fund - Private Equity Scheme-I. Butterfly Gandhimathi will sell a 13.7 per cent stake (post issue), implying a valuation of Rs 730 crore for the firm.
The shares are being issued to Reliance Equity fund at Rs 408 a piece. The share price of Butterfly Gandhimathi closed at Rs 406.6, up 3 per cent on Wednesday in a strong Mumbai market. The firm is currently trading near its 52-week high of Rs 420 per share.
According to earlier reports, Butterfly Gandhimathi entered Board for Industrial and Financial Reconstruction (BIFR) in 2003 and came out in 2008. The company is involved in making home appliances, kitchen products and cookware under the Butterfly brand.
Earlier known as Gandhimathi Appliances Ltd, the company undertook a merger with Gangadharam Appliances Ltd (which had the same promoters) and renamed itself Butterfly Gandhimathi Appliances in October 2011.
According to a CRISIL report, Butterfly Gandhimathi is expected to earn Rs 350-400 crore per annum from the institutional customer segment over the medium term. It also has an order of Rs 280 crore from Government of Tamil Nadu for mixers-grinders and table top grinders to be executed this fiscal.
Butterfly Gandhimathi is looking to expand the capacity of its liquefied petroleum gas (LPG) stoves and mixer-grinder product lines.
For the first nine months of FY12, Butterfly Gandhimathi reported a 102 per cent increase in total income to Rs 408.6 crore with net profit up 109 per cent to Rs 25.14 crore. Excluding supplies to the Tamilnadu Civil Supplies Corporation, Gandhimathi reported a 35 per cent increase in revenues for the nine month period to Rs 270.47 crore.
Reliance Equity Advisors Makes Debut PIPE
This is the fifth disclosed investment of Reliance Equity Advisors, which is currently investing from a fund worth Rs 1,200 crore, raised from domestic investors. This is also its first private investments in public equities (PIPEs).
Last year, Reliance Equity Advisors closed three deals by investing an undisclosed amount in Shankara Infrastructure Materials (pipe manufacturer), Rs 110 crore in Max Flex and Imaging Systems (manufacturer and distributor of printing-related consumables) and Rs 136 crore in VVF Ltd (manufacturer and marketer of personal care products and oleochemicals).
The PE firm made its debut in 2010 by infusing Rs 100 crore in Sarla Holdings, which runs international schools under the brand Pathways World School.
Action In Kitchenware, Home Appliances
There has been action in the home appliances space in the past. In December 2011, French home appliance maker Groupe SEB acquired 55 per cent in Maharaja Whiteline, a privately held electrical appliance maker from Delhi. Before that, Philips, one of the top players of the organised sector, had acquired Maya Appliances that sells its products under the Preethi brand.
Stovekraft Pvt Ltd, a kitchen appliances company with brands like Gilma and Pigeon, has raised funding from investors like Sequoia Capital India and Sidbi Venture Capital.
What's Cooking: M&A Action In Kitchen Appliances Market