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Schneider Electric Buys 74% of Luminous For Around $310M

31 May, 2011

French electrical-engineering and power-management company Schneider Electric SA said that it has acquired 74 per cent of the inverter and battery maker Luminous Power Technologies for around EUR215 million or $310 million.

VCCircle was the first to report on on April 1, 2011 that French energy major was in  advanced talks to acquire a majority stake in the Delhi-based Luminous Power Technologies. This acquisition paves way for an exit for financial investors. In 2007, CLSA Capital Partners, picked up a minority stake in Luminous for $20 million.

Luminous generated revenue of around EUR170 million in the fiscal year that ended in March 2011, Schneider said in a statement.

The purchase price for 74 per cent of the shares is $310 million. The total net debt of the company was Rs 240 crore as of 31 March 2011, leading to an implied transaction multiple of ~16x fiscal 2011 EBITDA. The remaining 26 per cent owned by the founders will be subject to put and call options.

This acquisition is expected to be accretive on earnings per share from the first year. This return on capital employed of the acquisition is expected to beat Schneider Electric’s weighted average cost of capital in year in year 4, the company said.

Luminous’s products “help homes and small and medium-sized businesses face frequent power cuts,” Schneider said. “With Luminous, Schneider Electric will become the leader in the Indian inverters and secured power market and gain access to a complementary retail network,” the company said.

“This acquisition is another significant step for Schneider Electric to become a leader in new economies,” said Laurent Vernerey, executive vice president of Schneider’s IT business.

“Luminous will also provide a platform to expand the inverter market into other new economies, in particular the Middle East, Africa and South-East Asia,” he said. Luminous is a leading player in the Rs 6,000 crore Indian inverter and power storage market that is growing at more than 20% a year.

The battery maker employs about 3,000 people in 8 different industrial sites in India and one in China. “From a small beginning 20 years ago, Luminous Power Technologies has evolved to become a strong market leader in the inverters and power storage space. We are glad to partner with Schneider Electric.The founders will continue to be closely associated with the future growth of the company in India and around the world,” said Rakesh Malhotra, Founder and Chairman of Luminous.

Schneider Electric has aggressive expansion plans for India in the energy efficiency space and has been acquiring companies. French electrical equipment giant Schneider just struck its fourth deal in India in less than two years by inking an agreement with Smartlink Network Systems Ltd and acquiring its structured cabling systems business Digilink for Rs 503 crore ($115 million).

It had earlier acquired Zicom Electronic Security Systems Ltd’s systems integration business for Rs 225 crore. In January this year, Schneider had acquired a majority stake in another listed Indian firm, APW President Systems Ltd, for Rs 62.2 crore. APW designs and manufactures standard and customised racks and enclosure, particularly for IT and telecom firms.

Schneider has come up with an open offer in this case. In June, 2009, Schneider had acquired Bangalore-based Conzerv Systems, an energy management firm with revenues of Rs 70 crore. One month later, the company followed it up with the acquisition of Bangalore-based Meher Capacitors, which  manufactures power factor correction capacitors.


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Schneider Electric Buys 74% of Luminous For Around $310M

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