Volex buys majority stake in Indian firm inYantra

The AIM-traded firm also announced the purchase of 13.5 acres of industrial land, including 3.5 acres and the operational buildings used by inYantra, in Pune, India, for $5m.

It said the equity investment and property purchase consideration, totaling $13m, was being satisfied in cash on completion from the company's existing debt facilities, and were both expected to complete in the coming weeks.

Volex said inYantra has expertise in printed circuit board assembly and box-build integrated solutions, operating from a dedicated manufacturing site.

It had established customer relationships and more than 500 employees, led by an “entrepreneurial” management team.

The company also described Pune as a “hub” for advanced manufacturing, and the location of one of Volex's largest medical customers.

It said the equity investment would create “substantial” additional opportunities with that customer, as well as provide further growth potential from the domestic and export market and enable a “strong” combined cross-sell proposition to mid-volume industrial customers in the region.

The investment would also strengthen Volex's ability to provide flexibility and choice to its global customer base in the provision of its vertically-integrated solutions, the board said, by adding a new manufacturing region to its international operating footprint.

Volex said the property purchase, meanwhile, would allow for an expansion in the range of capabilities the site could offer following the construction of a new 100,000 square foot medical and complex industrial technology cable assembly facility, with the scope for further development to support expansion in its other segments, including consumer electrical and electric vehicles.

For the year ending 31 March, inYantra was expecting to generate revenues of around $22m and EBITDA of about $1.6m across the consumer electrical and industrial markets.

The existing management team had delivered compound annual revenue growth of 38% in the last five years, and would remain in place to deliver a joint business plan focused on further growth.

“This transaction offers an excellent strategic opportunity to expand our global footprint, which is consistent with our strategy, and will bring new and strengthened capabilities in the key Indian market,” said executive chairman Nat Rothschild.

“InYantra's existing business, along with the imminent development of a complex cable assembly capability, will improve our customer offering, supporting low-cost manufacturing for existing and new domestic and export customers.

“Volex sees a further opportunity to improve inYantra's margins by allowing inYantra to leverage the economies of scale from being part of a larger group.”

At 1145 GMT, shares in Volex were down 4.99% at 228.5p.