Consumer goods maker Jyothy Laboratories is close to raising about $150-$200 million from private equity funds, with a deal likely to be announced in 6-8 weeks, three sources with direct knowledge of the matter told Reuters.
The Indian maker of fabric whiteners and detergents is in talks with a clutch of private-equity funds including the Carlyle Group, Actis, TPG Capital and Apax Partners to sell a minority stake, sources said.
The deal could be the second round of private equity infusion into Jyothy as Actis, CLSA and Baring India had invested and exited from the company earlier.
Jyothy Labs recently bought 51 percent of Henkel AG's Indian arm for 5.7 billion rupees ($127 million).
Germany-based Henkel also has an option to buy up to 26 percent in Jyothy in five years, which could pave the way for a decent PE exit, one of the sources said.
The private equity infusion will be in the merged entity and the funds are expected to be in the company's account by the end of July, one of the sources said.
The funds will be used largely for paying off debt raised for the Henkel buyout, the sources said.
“The fund interest in Jyothy is because, in three-four years the structure and size of Jyothy will be very different to what it is now,” said Naveen Trivedi, analyst at brokerage Pinc Research.
“Jyothy is among the few FMCG (fast-moving consumer goods)companies where the potential for growth is higher because their brands are strong in the categories they are present in,” he said.
Separately, Jyothy is planning to sell real estate assets owned by Henkel India for about 400 million rupees, another source said.
Shares of Jyothy Laboratories had lost 9 percent through Tuesday since it agreed to buy the Henkel India assets. The shares, which had been up about 0.2 percent on Wednesday, rose by as much as 3.7 percent on the day after Reuters reported the potential investment, and ended 2.19 percent higher.
Jyothy Lab Managing Director Ullas Kamath did not immediately return phone calls seeking comments. An Actis spokesman said it would not comment on speculation as a matter of policy.
Spokespersons for Carlyle and Apax Partners were not immediately available for comment, while a TPG spokesperson did not comment.
Indian boutique investment bank Mape Advisory Group is advising Jyothy Labs in the transaction, sources said.
Private equity investments in India rose 44 percent in the first quarter of 2011 to $2.6 billion from $1.8 billion a year ago, according to a study by VCCircle.com.
Companies positioned to benefit from rising spending power in the world's second-most populous country, with an economy growing at about 8.5 percent a year, have been especially sought after by private equity investors.
India's main share market index is down more than 9 percent this year on concerns about slowing domestic economic growth, high inflation and rising interest rates have.
Jyothy's board recently approved raising 5 billion rupees by selling shares to institutional investors.
Source: Reuters