TTK Prestige, the small appliances maker who has a 30 per cent share in the domestic pressure cooker market, has seen private equity (PE) interest.
The promoters of the company have sold 3.5 lakh shares to Cartica Capital, a Mauritius-based PE firm, at Rs 3,550/share, which is at a premium to the current market price of Rs 3,453. The company is to issue 3 lakh shares to the PE firm at the same price by July this year after taking shareholders’ approval.
This is the first PE deal in the kitchen appliances industry after Reliance capital’s PE arm invested in Gandhimati Appliances last year.
Promoter group holding in TTK Prestige will decline to 70 per cent from the current 74.96 per cent. Cartica Capital will hold 5.6 per stake in the company and become the single largest investor.
It needs mention that last year three funds — Fidelity Emerging Markets Fund, JP Morgan Funds and Thornburg Developing Fund bought shares of TTK Prestige from the secondary market. According to end-March disclosures, these funds hold a total of 3.79 per cent stake in the company.
The issue of shares to the new investor is not likely to bring significant dilution in earnings for the existing shareholders. The likely EPS dilution will be around 3 per cent. For FY13, the company’s per share earnings was Rs 117 (Rs 100 in FY12). Also, with the company intending to use the Rs 160 crore raised via the stake sale to expand business, earnings may only improve going ahead.
TTK Prestige is on the prowl for acquisition opportunities in both domestic and international markets in the kitchen appliances space. With only Rs 32.55 crore as cash end-FY13, the cash flow from stake sale will bring in the needed funds. Even otherwise, it could be used to pay off the outstanding debt. As of end-March FY13, the company had a debt of Rs 110 crore.
The stock of TTK Prestige has, however, fallen in the last two days. At Tuesday’s closing of Rs 3,453.30, the stock is two per cent below the closing on Friday.