Westbridge, Carlyle in talks to invest in Amber

Fairwinds Private Equity is expected to sell its 34% stake through a secondary deal in the transaction

The Carlyle Group, Westbridge Capital and Morgan Stanley Infrastructure Partners (MSIP) are among global private equity funds engaged in separate talks to acquire a large minority stake in Amber Enterprises Pvt. Ltd, one of the largest original equipment manufacturers (OEMs) of consumer durables in India, according to two people familiar with the development.

Fairwinds Private Equity (formerly Reliance Private Equity) is expected to sell its 34% stake through a secondary deal in this transaction, while another 10-15% of new shares will also be issued to the new entrant.

“The deal size could be in the range of 500 crore, with an enterprise value of 1,000-1,200 crore," the second person said. According to him, a sovereign fund is also engaged in discussions with Fairwinds.

Edelweiss Capital is advising Fairwinds on selling its stake in Amber. The term sheets are expected to be signed in two weeks, the first person said. Both people declined to be named.

Amber manufactures air conditioners, microwaves, components for refrigerators and other consumer durables for companies including LG, Panasonic, Philips, Whirlpool, Videocon, Godrej, Blue Star and Voltas.

Incorporated and promoted in 1992 by Kartar Singh, Amber Industries owns nine factories that are involved in producing original equipment for some of the biggest brands in India, according to its website.

Reliance Equity Advisors (now Fairwinds) had invested about 110 crore in two tranches in 2012 and 2013 to acquire a 34% stake in Amber.

Last year, Ramesh Venkat, former chief executive officer at Reliance Equity Advisors, the private equity arm floated by Anil Ambani’s Reliance Group, had acquired the fund through a management buyout and renamed it Fairwinds Private Equity.

Currently, Fairwinds Asset Managers manages Reliance Alternative Investments Fund Private Equity Scheme I, a $200-million fund raised in 2009-10.

“Only a few Indian companies can resist the competition from import of cheap Chinese products. The small-medium Indian manufacturers who compete successfully against the large Chinese companies are always in demand," said the first person involved with the deal.

Mails to Westbridge, MSIP and Jasbir Singh, managing director, Amber Group, did not elicit any response. Spokespersons of The Carlyle Group and Fairwinds declined to comment.

Westbridge Capital, with an investment worth $1.2 billion, has a wide exposure to the manufacturing space in India.

“The Make in India campaign is going to attract investments from abroad for major manufacturing projects and hence, the associated supplying companies, either front-end or back-end, will really get benefited. Similarly, manufacturers in niche space or in consumer goods sector are always on radar of PE investors due to the high margin and high growth in the sector," said S.V. Sukumar, partner and head (manufacturing sector), KPMG India.

On Monday, Carlyle had acquired a significant minority stake in DEE Piping Systems, which provides design, engineering and fabrication of pressure piping systems.

Carlyle had invested $25 million in Visen Industries Ltd, a Mumbai-based manufacturer of water-based polymer emulsions in 2011.

“The private equity investors are keen to acquire such large minority stake with an eye to acquire control stake gradually. There is always scope for selling the business to large global companies where PE investors can monetize their assets easily," an investment banker said on condition of anonymity.

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