The furniture hardware maker in sights of KKR, TPG, Kedaara

Founded in 1975, Ebco manufactures furniture fittings, including office and kitchen accessories and hardware.
Founded in 1975, Ebco manufactures furniture fittings, including office and kitchen accessories and hardware.

Summary

  • The deal is likely to see around 65-75% stake being sold to the PE funds, with the promoters retaining the balance

Mumbai: Private equity (PE) funds KKR, Kedaara Capital and TPG, among others, are vying to capture a controlling stake in Mumbai-based furniture hardware company Ebco, according to two people aware of the matter. The deal size could go up to $300 million. “The process is on, funds are currently doing due diligence," the first person said on condition of anonymity.

He added that the deal is likely to see around 65-75% stake being sold to the PE funds, with the promoters retaining the balance. “The business is being valued at around $450-500 million," he added. The promoters are likely to continue running the business, the two people said. Ebco has signed up investment bank Avendus to help it with the process.

“The company, facing tough competition in an industry that has large players with a pan-India presence, is looking to expand its presence," the second person cited above said, also requesting anonymity.

In response to emailed queries from Mint, Geoffrey Nagpal, Ebco’s managing director, confirmed the fundraising plans.

“Ebco is currently running a process to invite large private equity funds to help it grow its business," said Nagpal, who is the second generation of the promoter family. “The promoters will remain significant partners along with the PE fund to drive growth in the business, through investments in manufacturing, branding and product development."

Spokespersons of TPG, Kedaara Capital and KKR declined to comment.

PE interest in a company like Ebco comes on the back of a predicted 13.37% compounded growth of the furniture market to $37.7 billion by 2026 from $17.4 billion in FY21, according to Invest India. The furniture fittings industry is a direct beneficiary of this growth.

Organized players in the industry face tough competition from the unorganized market. Ebco, which is currently clocking 850-900 crore in revenues, is looking to grow manifold. “We are targeting to grow to nearly 3,000 crore in revenues in five years," Nagpal added.

Founded in 1975, Ebco manufactures furniture fittings, including office and kitchen accessories and hardware. The firm has manufacturing facilities in Palghar and Vasai in Maharashtra. It sells products under brands such as Ebco, Livsmart and WorkSmart, a ratings release by Crisil dated 12 March shows.

As per the ratings release, the company’s revenues grew to 791 crore in financial year ending 31 March 2023. “The revenues are expected to be around 830 to 870 crore in fiscal 2024," it said. As per the Crisil release, the company’s operating margins have been in range of 13.4-15.3% over the past five fiscals.

The company sells through a network of 30 distributors across India, of which 20 are exclusive. Its current product portfolio includes more than 4,500 variants across office furniture accessories, kitchen system accessories, general hardware systems, etc.

It competes with large, established brands such as Hafele, Godrej, Dorset and Hettich, among others.

 

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