Temasek sees 10 times gain with 5.5 billion euro stake sale in Indian JV with Schneider

[SINGAPORE] Temasek Holdings has sold its minority stake in an Indian joint venture (JV) to its partner Schneider Electric for 5.5 billion euros (S$8.2 billion) in cash – over 10 times what the state investor had initially paid for the shares.

Temasek had bought a 35 per cent stake in the JV for 530 million euros in 2020, according to Schneider’s financial report that year. The French tech giant owns the remaining 65 per cent of the JV, called Schneider Electric India Pte Ltd (SEIPL).

Schneider’s full ownership of the JV “will support (the) speed of decision-making for India as a hub”, the company said in a press release on Wednesday (Jul 30).

“This transaction represents the logical next step in Schneider Electric’s strategic investment focus on India as both an attractive domestic growth market and one of the key hubs in its multi-hub strategy,” the company said.

Schneider added that the deal’s financial terms are “demonstrative of the value created” by SEIPL for both shareholders.

“Considering Schneider’s strong belief in the future potential of its India business, (the) timing is opportune to take full control and capitalise on future value creation given India’s economic tailwinds,” said the company, which specialises in energy management and industrial automation solutions.

SEIPL was formed in 2020 from the combination of Schneider’s low-voltage and industrial automation products business in India with the electrical and automation unit of Larsen & Toubro. Schneider had announced its plans to acquire the latter in 2018, in partnership with Temasek.

Temasek played an “important role” both during and after the formation of SEIPL, said Schneider.

India is now Schneider’s third-largest market and is one of its four key hubs. SEIPL last year recorded statutory revenues of 1.8 billion euros, including export sales. Total sales in India amounted to 2.5 billion euros across subsidiaries.

Schneider expects a double-digit compounded annual growth rate in organic sales growth for SEIPL and plans to expand its capacity in India by 2.5 times to three times.

It sees India as an “important research and development and supply-chain hub” for Asia-Pacific and other emerging markets.

Schneider’s chief executive Olivier Blum thanked Temasek for its partnership that was “instrumental” to SEIPL’s success.

Chia Song Hwee, Temasek’s deputy chief executive, likewise said that the deal “reflects our belief that partnerships can create long-term value”.

Temasek recently indicated that it is looking to back more family-run businesses in India, following its US$1 billion investment into snacks maker Haldiram.

Separately, the state investor announced on Tuesday that it would raise its stake in Italian luxury group Ermenegildo Zegna to 10 per cent.