Private equity firm Warburg Pincus is set to acquire a majority stake in Watertec (India) Pvt. Ltd, a bathroom accessories and fittings maker, two people aware of the development said.
The company is jointly owned by Coimbatore-based UMS Group, Watertec Malaysia and Sri Lanka-based South Asian Investments. Warburg will buy around 66% of the company from Watertec Malaysia and UMS Group at a valuation of around $200 million, the people said on condition of anonymity.
“Warburg is likely to acquire the remaining stake over the next 12-24 months,” one of the two people said.
Founded in 1995, Watertec India manufactures over 150 products, including taps, showers, mixers, faucets, bathroom accessories, connection hoses and PVC pipes.
Spokespeople for Warburg Pincus, Watertec Malaysia, UMS Group and Watertec India did not respond to emailed queries.
In an August 2022 ratings release, Crisil said that Watertec India derives around 60% of its revenue from the southern states and, thus, remains vulnerable to geographical concentration risk.
“South India has been a key revenue contributor over the past few years, and efforts made to enter non-south markets may translate into benefits only in future. Further, the bathroom fittings segment is dominated by unorganized players operating on a competitive cost structure. Exposure to intense competition from these players may persist over the medium term,” it said.
According to Crisil, in FY21, the company clocked sales of ₹416.40 crore with a profit after tax of ₹13.72 crore. “Revenue has grown by around 11% in compounded terms over the three years through March 2022, mainly driven by a stronghold in South India. A planned foray into the premium segment through imported fittings should enhance the product portfolio and growth in topline,” the release said.
Warburg Pincus, which has more than $83 billion of assets under management globally, has sold some of its India investments this year. Apart from exiting PVR Ltd, it has sold a stake in Kalyan Jewellers. Globally, it has raised $15.4 billion for its new fund, through which it will invest in assets across markets. Mint earlier reported Warburg’s plans to exit its seven-year investment in third-party logistics services provider Stellar Value Chain Solutions.
According to various industry estimates, the Indian sanitary ware and bath fittings market stood at around $8.2 billion in 2022 and is slated to grow at an average annual growth rate of 9% up to 2027. Some of the key entities in the organized segment include HSIL Ltd, Parryware, CERA Sanitaryware, Jaquar, and Grohe India.
Watertec India reported sales of ₹499.3 crore and profit after tax of ₹69.2 crore in FY22, according to VCCEdge, the data platform owned by HT Media. In the previous year, it reported a profit of ₹57.1 crore on sales of ₹416.4 crore.
