The Indian luggage and travel accessories market made a major move when VIP Industries, one of the largest manufacturers and producer of luggage in the country made a major stake sale deal. Multiples Private Equity has signed a definitive agreement to buy a large 32 percent shareholding in the company by the promoter group indicating, a new beginning in the growth track of the company.

Transaction Details

It entails the sale of a total of around 4.54 crores equity share, which comprises of 32 percent of the total amount of paid-up share capital of VIP Industries. The transaction was formally unveiled on Sunday night, with the selling consortium mainly made up of promoters of the company who are primarily the Dilip Piramal family.

Key Selling Entities and Their Stakes

The promoter group’s stake distribution reveals the complex ownership structure that existed before this transaction:

  • DGP Securities holds the largest portion at 27.01%
  • Piramal Vibhuti Investments Ltd. accounts for 15.72%
  • Kemp and Company Ltd. represents 2.36%
  • Kiddy Plast Ltd. contributes 2.34%
  • Alcon Finance and Investments Ltd. holds 1.98%
  • DGP Enterprises Pvt. Ltd. maintains 1.38%
  • Dilip Piramal personally owns 0.45%

The Acquiring Consortium

The buyers consortium, of which Multiples Private Equity executes the leading position, incorporates a number of strategic partners. The acquiring entity includes Multiples PE Fund IV, Multiples Gift Fund IV, Samvibhag Securities Pvt Ltd and Mithun Padam Sacheti, Siddhartha Sacheti, as its individual investors. 

There is a wide range of experience represented in this heterogeneous consortium between institutional knowledge and the knowledge of individual investors, which could enhance the perspective of VIP Industries to a great extent.

Mandatory Requirements of Open Offer

The buyers will make a mandatory open offer to the retail investors of an extra 26% stake as per the regulatory requirement by SEBI takeover code. This open offer means that the minority shareholders also have a chance of being part of the transaction with reasonable rates and at the moment, the offer price is not revealed.

Governance and Control on Board

This transaction introduces major changes in governance in VIP industries. Its new investors will take the majority share in the make-up of the board, having most directors appointed, which is a departure to the earlier structure when the board was controlled by the promoters. Nevertheless, the deal leaves the founding family with certain power.

Although Dilip Piramal has given up the control in operations, he has retained certain rights. He can suggest an independent or non-independent family executive director to become a part of the board. Such structure provides the continuity along with the provision of new impulses with a new government.

Strategic Implications and Future Rights

The share purchase agreement includes protective clauses that could influence VIP Industries’ future ownership structure. If the promoter group or Piramal family decides to sell remaining shares in the future, the buyers hold the right of first offer, followed by a right of first refusal. These provisions help the new investors maintain strategic control and prevent unwanted ownership changes.

Market Performance and Valuation

VIP Industries’ stock performance reflects positive market sentiment around the transaction. The shares closed 1.6% higher on Friday at ₹456, with the stock gaining approximately 13% over the past month. Based on Friday’s closing price of ₹457 per share, the company commands a total market valuation of ₹6,481 crore.

This valuation represents the market’s confidence in VIP Industries’ recovery prospects and growth potential under new management. The stock’s recent performance suggests investors view the private equity involvement positively.

Industry Context and Recovery Prospects

The transaction occurs at a crucial time for VIP Industries and the broader travel accessories sector. The company faced significant challenges during the pandemic due to travel disruptions and reduced consumer mobility. However, recent trends indicate a strong recovery in tourism and business travel, creating favorable conditions for luggage and travel accessory manufacturers.

Post-pandemic recovery factors supporting VIP Industries include:

  • Gradual normalization of domestic and international travel
  • Increased business travel as companies resume operations
  • Growing consumer confidence in travel and leisure activities
  • Expanding middle-class population with higher disposable income

Private Equity Interest in Consumer Goods

This transaction exemplifies the growing appetite of private equity investors in India’s branded consumer goods space. Private equity firms recognize the potential in established brands with strong market positions, particularly those poised for post-pandemic recovery.

Multiples Private Equity’s involvement brings several advantages:

  • Operational expertise in scaling consumer brands
  • Financial resources for expansion and modernization
  • Strategic guidance for market penetration
  • Network access for partnerships and distribution

What This Means for Stakeholders

For Existing Shareholders

The mandatory open offer benefits the existing shareholders that otherwise have the benefit of liquidity at possibly favourable prices. Long-term value creation could be produced by the professional management approach which is expected during the new owner of private equity.

For Employees and Management

The transaction likely brings improved operational processes, technology upgrades, and potentially better growth opportunities. Private equity involvement often leads to performance-driven cultures that can benefit committed employees.

For Customers and Market

Consumers may benefit from enhanced product offerings, improved quality, and better service as the company invests in growth under new ownership. The market gains from increased competition and innovation.

Final thoughts by GI experts

The sale of stake of VIP Industries is not merely a change of ownership. It means that he has confidence in the Indian consumer goods market and in the very potential of the travel accessories market. With travel habits resuming to normalcy and customer spending picking up, VIP Industries seems to be in a position to grow as per the shifts with its new ownership pattern.

This transaction is bound to succeed which will probably have repercussions on to similar transactions in the consumer goods industry which may then invite additional participation among the private equity players as they acquire already established Indian brands having a significant market reach and a potential to grow.

VIP Industries has been undergoing a new phase as professional management, strategic direction and sufficient capital backing can make its future path of several years to come.