Kolkata | Mumbai: In a significant move that could reshape the landscape of the Indian consumer appliance market, Whirlpool Corporation, the renowned American multinational, is exploring the sale of a substantial portion of its stake in Whirlpool of India Ltd. This decision has piqued the interest of several prominent private equity firms, including Advent International, Bain Capital, TPG, EQT, Carlyle, and KKR. Sources familiar with the situation have disclosed that these firms have been approached regarding potential investment opportunities in the Indian subsidiary as the U.S. parent company seeks to reduce its ownership.

Whirlpool Corp. aims to divest a 31% stake in Whirlpool of India Ltd, which is a significant contributor to its Asian revenue, generating an impressive 85% of the total. The company is targeting net cash proceeds between $550 million and $600 million (approximately Rs 4,684 crore to Rs 5,110 crore) from this transaction. To facilitate the sale, Goldman Sachs has been appointed as the financial advisor, launching a formal stake sale process earlier this month.

The strategic intent behind this move is clear: Whirlpool Corp. wishes to maintain a 20% holding in its Indian arm, thereby ensuring it remains the largest shareholder. However, it is also recognized that if a single entity acquires a stake of 26% or more, it would trigger an open offer for minority shareholders. Despite this, many private equity firms are primarily interested in securing controlling stakes, which adds an intriguing layer to the ongoing negotiations.

Currently, discussions are in the preliminary stages, with management meetings just beginning to take place. Numerous private equity funds that are also vying for a stake in Haier India are likely to express interest in Whirlpool's offerings as well. Among these are TPG, Warburg Pincus, Goldman Sachs, and GIC from Singapore, alongside several influential family offices of prominent Indian industrialists, as reported by Economic Times on Monday.

The appetite for investment in the consumer appliance sector is not new for private equity firms. Advent International previously took control of CG Consumer in partnership with Temasek and successfully exited through the markets. Additionally, they remain the controlling shareholders of Eureka Forbes, which was obtained from the financially troubled SP Group.

Following the announcement of the planned reduction in stake, Whirlpool Indias stock experienced a significant decline, hitting a 52-week low of Rs 899 on March 3, down from Rs 1,577 on January 29. As of Monday, the stock closed at Rs 1,199.35, with a market capitalization of approximately Rs 15,216.4 crore. Earlier this year, the parent company had sold a 24.7% stake in the Indian unit for Rs 4,039 crore through block deals, involving buyers such as SBI Mutual Fund, Aditya Birla Sunlife Mutual Fund, and the foreign institutional investor Societe Generale.

Whirlpool has a long-standing presence in the Indian market, being one of the first multinational electronic brands to establish operations in the country in the late 1980s. However, it has struggled to compete on the same level as rivals such as LG, Samsung, and Haier, which entered the market more recently, as well as local brands like Voltas and Lloyd, which are owned by Havells.

According to a senior industry executive, Whirlpool Corp. has expressed a desire for the Indian subsidiary to carve out its own path without excessive interference, prompting the decision to decrease their stake to a minority level. This scenario presents an intriguing opportunity for private equity firms to take control, enhance the business's performance, and ultimately increase its market valuation.

James W. Peters, Whirlpool's Chief Financial and Administrative Officer, addressed analysts last Thursday, noting that the Indian stake sale has generated significant interest from large third-party investors. He anticipates that the cash raised from the transaction will be available in the second half of 2025, with plans to use the funds to repay or refinance existing debt, similar to prior actions taken by the company.

Whirlpool Corp. did not respond to inquiries regarding the stake sale. However, the key private equity players, including Carlyle, Advent International, TPG, EQT Group, and KKR, also declined to comment on the matter.

The reduction of its shareholding is positioned by the parent company as a means to grant increased autonomy to the Indian unit, allowing for greater focus on accelerated growth while leveraging its well-capitalized business for further investments. In February, Peters had articulated that Whirlpool is not seeking a strategic buyer for its shares in the Indian unit, emphasizing that such a transaction would not be as advantageous as maintaining the brand and technology over the long term. He indicated that this transition would empower Indian management to make decisions independently without the constraints of balancing the interests of both U.S. and Indian shareholders.

In terms of financial performance, Whirlpool India reported sales of Rs 6,332 crore and a net profit of Rs 167 crore for the fiscal year 2024. Revenue from operations saw a remarkable increase of 17% to Rs 5,530 crore during the nine months ending December 2024 compared to the previous year. For context, LG India posted FY24 sales of Rs 21,557 crore with a net profit of Rs 1,511 crore, while Voltas recorded sales of Rs 8,687 crore and a net profit of Rs 604 crore during the same period.

As of the March quarter, Asia contributed 7.4% of Whirlpool Corp.s global sales, totaling $3.6 billion, while accounting for 9% of the company's global EBIT of $214 million. With the parent companys plans to divest a 31% stake in the Indian unit, multiple potential scenarios could unfold, which may or may not be favorable for minority shareholders, as noted by Aniruddha Joshi of ICICI Securities.