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US global home appliances giant Whirlpool Corporation has roped in top investment bank Goldman Sachs as the sell-side advisor for the former's proposed part stake sale in listed Indian subsidiary Whirlpool of India in a bid to fast-track growth, multiple industry sources in the know told Moneycontrol.
"Goldman Sachs has been roped in, and preliminary discussions as part of the stake sale process have been initiated. Management meetings have been held recently between potential suitors, including private equity funds, and the firm," said one of the persons above.
A second person confirmed the above.
A third person said that global funds like Advent , KKR, Bain and TPG may show early interest in the deal and added that participation by overseas strategics could not be ruled out. Incidentally, Advent has struck two home appliances deals in the past with investments in Eureka Forbes and Crompton Greaves Consumer Electricals.
All three persons above spoke on the condition of anonymity.
On 30 January, Whirlpool of India disclosed that parent Whirlpool Corporation announced its intention to sell down its ownership interest in the former to approximately 20% by mid to late 2025, by way of one or more market sales.
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At the end of the day's trade on April 21, Whirlpool of India's market cap stood at Rs 13,881 crore. Whirlpool Corporation holds a 51% stake, and a sell-down to approximately 20% stake would mean dilution of 30%, which translates into a valuation of ₹4,164 crore at current levels.
Interestingly, Whirlpool Corporation expects to remain the largest shareholder following completion of the anticipated sell-down, the January disclosure had added.
When contacted, Goldman Sachs, Advent , Bain Capital, TPG and KKR declined to comment. Email queries sent to Whirlpool of India remained unanswered at the time of publishing this article and reminders have been sent.
A spokesperson for Whirlpool Corporation said, "We anticipate reducing our stake in Whirlpool of India by ~30% by mid to late 2025. Whirlpool of India will have increased flexibility, enabling it to focus on accelerated growth and investing in initiatives to drive long-term sustained growth. Whirlpool of India can leverage their well capitalized position to accelerate their growth initiatives which is good for the India shareholder, but has not been valued by the U.S. shareholder."
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The Whirlpool of India management team has been doing an excellent job growing the business and building our Whirlpool brand in India through new and innovative products. We have complete confidence in the Whirlpool of India management team and their ability to continue to build on the business performance and create shareholder value. Whirlpool of India continues to be an attractive business, with strong fundamentals to accelerate growth.
The announcement on our January earnings call of the intention to sell part of our stake in the business has generated significant interest, including from large, third-party investors. Whirlpool Corporation will evaluate all potential opportunities to maximise the value to Whirlpool of India business and to Whirlpool Corporation."
In February 2024, Whirlpool Corporation sold as much as 24% of Whirlpool of India via the block deal route to pare debt. The Indian unit's share price has dipped by 53.48% over the last six months, but recovered to rise by 11.39% in the last month. For FY24, Whirlpool of India posted revenues of ₹6,332 crore and a net profit of ₹167 crore.
"In FY 2023-24, the consumer durables industry grew single-digit, driven by premiumization, after experiencing a significant rebound of about 18% in FY 2022-23, indicating a post-pandemic recovery. Growth this fiscal was primarily fueled by the focus on premium products, such as appliances featuring smart technologies, larger capacities, and energy-efficient attributes," the firm's MD Narasimhan Eswar said in the firm's last annual report.
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He added, "Air conditioners, a low penetration category, showed robust double-digit growth, while washers, which have slightly higher penetration, grew at a mid-single digit rate. Conversely, the refrigerator industry, the most penetrated category, hardly grew, facing considerable challenges during the year. During the financial year, the success of Elica PB Whirlpool's cooking business, with notable revenue growth of 8% and profit before tax growth by 40%, added to the overall positive performance of the company."
