VIP Industries Eyeing Sale Amid Decline in Market Share and Rise of New Entrants
Mumbai: Global private equity firm Advent International is reportedly eyeing a controlling stake in listed luggage and travel accessories maker VIP Industries, reviving talks that were initially discussed over nearly a year ago.
The deal would mark a significant development in the company's journey as its promoter group led by Dilip Piramal had expressed interest in selling a majority stake to the private equity firm back in October last year. However, at that time, talks were not concluded, and it seemed unlikely that the sale would materialize.
Now, with the promoters' decision to sell their entire stake in the company - amounting to around ₹3,379 crore as of September 2024, according to BSE data - Advent International is reportedly at the front runner to acquire a controlling stake in VIP Industries.
VIP's market value has slid by nearly 25.7% over the past year, with its share price on the NSE closing on Tuesday around ₹459.95. Industry insiders expect the deal to be priced in a premium of 10-15% compared to the current market value.
The proposed stake sale would also trigger an open offer as per regulatory guidelines, targeting retail and institutional investors who currently own shares of the company. With promoters possessing a slight majority at around 51.74%, this development marks an end to their long-term ambitions for succession planning with VIP's future.
Over the years, VIP Industries has grown organically and inorganically through acquisitions. Acquiring the London-based Carlton brand in 2004 and combining it with Aristocrat Luggage Limited is only a two-step process that took place before it merged and sold luggage under those brands.
With a distribution network spanning over 11,430 points of sales across almost 1,300 towns, VIP Industries continues to grow its revenue by 7.5% to ₹2,257 crore. It targets an additional expansion of exclusive brand outlets from five hundred current to eight百 soon within the next two years in its fiscal year.
However, with competitors mounting strong such as Samsonite and others along with direct online brands capturing market share over time, there has also come a growing challenge for VIP’s position in India’s luggage space.
It was initially set that about four out of 10 buyers buying branded luggage owns current stocks at VIP. Nevertheless, the industry is seeing rapid growth due to an expanding economy amid rising incomes and digital connectivity across the travel infrastructure.
Rising Demand for Premium Luggage
The market value for the Indian luggage sector increased to ₹15 crore in its latest projections with growth being projected at 5 per cent within a four-year window following 2024’s value of $15 billion.