Promoters of Igarashi Motors India are understood to be looking to exit the firm and have initiated discussions with both strategic players as also private equity funds, persons close to the development indicated. The persons indicated the promoters have had initial talks with funds like Carlyle, Apax Partners, AION Capital and Advent as also strategic players like Samvardhana Motherson, Varroc Engineering and Kirloskar Electric.
The promoters have a combined stake of 75% and the market capitalisation of the company at the close of trade on Friday was Rs 1,502.78 crore. While all the promoters are understood to be looking to sell their respective stakes, it is also possible Igarashi Electric Works might be willing to buy out the other stakeholders, the persons said. The market price is not reflective given the low floating stock and small trading volumes in the stock, an investment banker explained, adding that the sale price could be higher than the market price, at around Rs 650-750 per share.
In 2017-18, the company reported revenues of Rs 458.44 crore and a net profit of Rs 66.27 crore. According to Bloomberg, the gross debt of the firm stood at Rs 49.59 crore as of September 2018. An e-mail sent to the company requesting a comment remained unanswered.
At the end of December, 2018, 42.83% of Igarashi equity capital was held by Agile Electric Sub Assembly, which is the holding company. Igarashi Electric Works, Japan holds 3.07% directly and also holds a 55.21% stake in Agile Electric.
Another 21.15% was held by the firm’s managing director Mukund P, while 7.94% was held by MS Igarashi Electric Works HK. Shares of Igarashi Motors closed Friday’s session 0.89% down at Rs 477.45 on the Bombay Stock Exchange. This puts the value of the 75% stake of the promoters at Rs 1,127.085 crore. The firm posted a net profit of Rs 14.62 crore for the quarter-ended September 2018 on the back of revenues of Rs 125.55 crore.
In 2013, Blackstone had bought a 97.9% stake in Agile Electric Sub Assembly. Almost two years later in 2015, it sold the stake to Igarashi Electric Works of Japan along with MAPE Securities, Alpha FDI Holdings and Tata Capital Growth Fund. The sale reportedly fetched Blackstone close to Rs 656 crore that amounted to a 2-x return.
Igarashi makes and exports small motors for the automotive sector and its customers include Bosch, Delphi, Dellorto, Cooper and Visteon. The firm offers small DC brush motors, geared motors, flat and round type motors and motor parts.
The company is also involved in motor contract manufacturing operations. It offers its products for automobiles, OA equipment, power tool, electric fishing reel, home appliance and industrial appliance applications.
According to the company’s website, the firm was originally incorporated as CG Igarashi Motors (CGIML) in January 1992 as a joint venture between Crompton Greaves, India; Igarashi Electric works, Japan and International Components Corporation, USA. The company’s name was changed from CGIML to Igarashi Motors India from July 2003.