Havells India, a manufacturer of lighting and electrical products, plans to sell most of its stake in European lighting system and fixtures company Sylvania. Sylvania is one of the four leading lighting brands in Europe and Latin America.
Negotiations with global leading brands and private equity firms are expected to reach conclusion by the end of December 2015, according to one insider that chose to remain unnamed. The total equity value is worth approximately INR 10 billion (US $150 million), said the source. A Havells spokesperson refused to comment on the divestment progress.
The main reason behind this change is that the company intends to turn its focus to the Indian market. The deal would have two stages. The first stage includes selling most of the stake in the following 3 to 5 years.
With a posted net revenue of INR 85.7 billion (US$ 12.8 billion) in FY15, Havells acquired Sylvania for GBP £227 million (US $340 million) along with debt, and has invested GBP £80 million (US $120 million) in equity. The stake sale of Sylvania is a part of Havells India’s plan to shift focus to the domestic Indian market, said the source.
The global market trend has greatly shifted from conventional lightings to LED once. Earlier in November on an investment setting, Havells said it will need to put more focus on the nearly saturated European market, where LED lightings takes 40% of market share.
With emerging demand, Havells will focus on the Indian market while awaiting new opportunity to invest in the European market in the future. Meanwhile, support from the Indian government, the company is expected to profit in the long run.
