Acquisitions on mind, Havells eyes Slyvania stake sale, listing

The company is looking to raise at least Rs 300-600 crore from a 15-30% equity offload in the European unit

Electrical goods maker Havells is mulling either a minority stake sale or a listing of its international subsidiary, Slyvania, to raise funds for acquisitions.

Slyvania’s global president Rajiv Goel told Business Standard the company was contemplating offloading 15-30 per cent of equity in next 12-18 months. He said the enterprise valuation sought was in excess of Rs 2,000 crore, the price Havells paid in 2007 to acquire Slyvania. He said the firm was speaking to private equity investors and merchant bankers for its fundraising plans. He declined to divulge names of the investors.

Analysts tracking the company said a 15-30 per cent offload would mean Havells was looking to raise Rs 300-600 crore from the stake sale or listing.

The plans for global acquisitions come as Havells, with operations in 42 countries through Slyvania, eyes more markets, as well as product categories to grow its business.

Slyvania, which has close to Rs 3,800 crore worth of sales, is mostly present in the lighting space and plans to expand into categories like switch-gears, wiring and other related electrical equipment.

Acquisitions, Goel said, would help the company quickly achieve its objective of product and geographical expansion, besides helping the subsidiary align its portfolio with the parent. “We are not looking at large acquisitions. The deal size would be $50-100 million (Rs 300-600 crore),” Goel said over telephone from Noida.

The markets where Slyvania is eyeing acquisitions include Mexico, Colombia and Brazil in Latin America, besides the UK, France and Germany in Europe.

Acquisitions are also expected to help the company quickly increase turnover, which has hovered around Rs 3,800 crore for the past two years (2012 and 2013; company follows a January-December accounting year). While Slyvania does not report standalone profit numbers, its earnings before interest, taxes, depreciation and amortisation (Ebitda) was between Rs 150 crore Rs 175 crore in both 2012 and 2013.

“We expect sales to be flattish in 2014, thanks to a weakness in the Europe market, but Ebitda should improve, to over six per cent of sales (or Rs 230 crore) from 4-4.5 per cent of sales now. We hope to achieve this on the back of our performance in Latin America, as well as prudent cost management,” Goel said.

Sylvania, when it was acquired in 2007, wasn’t doing very well. The company, which operates in the business-to-business space, had suffered losses and its revenue had declined to Rs 3,000-3,500 crore from Rs 3,600 crore a year earlier. Goel said the company was now looking at other avenues of growth as operations had now stabilised.