VIP owners sell 32% stake to consortium, to trigger open offer for luggage firm

The share sale purchase will trigger an open offer and is likely to help the buyers mop up more stake in the company.

Mint first reported that Multiples PE was in talks with VIP Promoters for a share purchase on 23 June. 

As per the share purchase agreement entered between the buyers and the sellers, Dilip Piramal and family, the promoters of VIP Industries have sold around 45,446,305 equity shares, constituting approximately 32% of the total paid-up share capital of the company, the company disclosures to stock exchanges show. 

The buyers include Multiples PE Fund IV, Multiples Gift Fund IV, Samvibhag Securities Pvt Ltd, and individual investors Mithun Padam Sacheti and Siddhartha Sacheti, the filings show.

As per the share purchase agreement, pursuant to the conditions, the buyers will take control of the company and the selling promoter will have the right to nominate one person on the board. Dilip Piramal and family also have a ‘tag along clause’ in case of future sale of the company by these buyers.

Valuation not disclosed

The company did not disclose the valuation at which the shares have been sold or the open offer will be priced. A person with direct knowledge of the development said that the shares have been sold at ₹388 apiece, or ₹1764.1 crore.

The company’s shares closed at ₹456.00 a share, up ₹7.20 or 1.60% on Friday. The sale price essentially means a discount of around 15% to Friday’s close. 

According to the data available with the exchanges, the promoters own a little over 50% of VIP Industries, the owner of luggage brands such as VIP, Carlton and Skybags. The market value of VIP Industries is around  ₹ 6,476.10 crore, valuing the promoters’ stake at about  ₹3238.5 crore as on Friday’s close on NSE. 

The stake sale is part of ongoing efforts by the promoter family to exit the business. Last year, the company was in advanced talks with global private equity firm Advent International to sell a controlling stake, Mint had reported. The deal did not go through due to various reasons, including valuation mismatch. The promoters then appointed homegrown investment bank Arpwood to help with the sale. Mint was first to report the company’s renewed stake sale plans on 28 March. 

VIP Industries, a brand synonymous with the aspiring Indian travellers of the 90s, is much larger than its domestic rivals, except Safari Industries. Rising incomes, an expanding travel infrastructure, and online bookings have fuelled a surge in travel among Indians, resulting in heightened demand for luggage. 

Lucrative opportunity

VIP Industries, which holds a substantial market share in this rapidly growing sector, offers a lucrative opportunity for PE firms to tap the burgeoning demand for travel-related products from India’s increasingly mobile middle class.

Over the years, VIP has grown organically and inorganically too. It acquired the London-based Carlton in 2004 and merged with Aristocrat Luggage Ltd in 2007. It has been selling luggage under these brands since then.

With new startups emerging in the space to challenge the incumbents, the Indian travel and luggage space is heating up. Earlier this year Mint reported on how new-age direct to consumer brands such as Mokobara, Assembly, Nasher Miles, Icon and Uppercase have secured funding from risk investors and are looking to disrupt the space.

India’s organized luggage market is led by companies such as VIP Industries, Samsonite and Safari. The organized sector accounts for about 40% of India’s  ₹15,000-crore luggage industry, according to a report by global analytics firm Crisil last year, and it is mainly this segment that has boomed post-pandemic. 

VIP has close to 44% market share in the organized luggage category, according to an ICICI Securities analyst report last year.