Private equity firm Advent International Corp and Singapore state investment firm Temasek Holdings failed to buy any significant number of shares in the open offer for Crompton Greaves Consumer Electrical Ltd (CGCEL).
The two firms had launched the open offer in May this year to acquire an additional 26% stake in CGCEL for about Rs 1,695 crore ($251 million then).
The offer for almost 163 million shares was made after the two firms last year agreed to purchase Avantha Group’s 34.37% stake in the demerged consumer products business of Crompton Greaves Ltd for Rs 2,000 crore.
Advent managed to buy only 22,410 shares in the open offer. Temasek didn’t purchase any share. As a result, their stake in the company remains around 34.37%. Public shareholders own the remaining stake, according to a regulatory disclosure.
The development doesn’t come as a surprise. Indeed, VCCircle had indicated in May that the offer was unlikely to succeed as shares of CGCEL were trading above the price offered by the two investors.
The offer was made at a price of Rs 104 apiece. Shares of CGCEL closed at Rs 173.70 on Friday on the BSE, near its record high touched on Thursday.
Advent and Temasek join PE giant Blackstone in facing a failed open offer. Blackstone had made an open offer to buy a 26% additional stake in Bengaluru-based IT services firm Mphasis Ltd after striking a deal in April to buy a majority stake from Hewlett Packard Enterprise. But it couldn’t acquire any significant number of shares as the price offered was lower than the actual trading price.
CGCEL makes products ranging from fans, light sources and luminaires, pumps and household appliances such as geysers, mixer grinders, toasters, irons and electric lanterns.
The demerger of CGCEL from Crompton Greaves was part of the Avantha Group's plans to create independent growth opportunities for its two large but significantly different businesses - power, industrial and automation, which is a B2B business, and the consumer products business, which is B2C.
Avantha Group also runs India's largest paper firm Ballarpur Industries, besides energy generation company Avantha Power. It also has several small and medium-sized firms in processed food, IT, chemicals, etc.
HSBC Securities and Capital Markets India Pvt. Ltd and Barclays Bank Plc managed the open offer.
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