IEK Group consolidates Legrand's former Russian assets into one business unit, continues integration

MOSCOW. March 12 (Interfax) - Russian electrical equipment manufacturer IEK Group has consolidated the former Russian assets of France's Legrand Group into a new business unit, the company reported.

"The assets that IEK Group acquired from Legrand - Daccord LLC, Contactor JSC and EBS LLC - complement our competencies in technologies and product solutions. In the initial stage of their integration into our structure, they continued to develop as an independent business," IEK Group CFO Mikhail Gorbachev said in the company's press release.

The principal owner of these companies, with 51%, is currently JSC LIM Group, which IEK founded at the end of 2023. IEK Group still holds the other 49%.

Gorbachev will oversee the operations of the new business division.

IEK Group, the flagship company of which is JSC IEK Holding, told Interfax that the company plans to integrate the former Legrand assets into the group at the management level.

"A decision has been made to integrate all key management functions within IEK Group - commercial, logistical, manufacturing, financial and so on. The integration also envisages that the commercial policy and strategy [of all group divisions] will be unified," the company said.

The integration is scheduled to be completed by the end of this year.

IEK Group, which acquired Legrand's Russian assets in 2023, announced last year that it would invest 1 billion rubles of its own money to modernize the acquired production facilities.

"The funds will foremost be aimed at localizing components for production that were previously purchased in Europe. The main objective here is to form a comprehensive offering for wiring accessories, for module and power control equipment. It was lost after Legrand Group's departure from the Russian market. We also face the challenge of import substitution of products that were imported from unfriendly countries," Gorbachev said at the time.

IEK Group planned to invest a total of 6 billion rubles in its business in Russia in 2024, including 2.9 billion rubles in developing production, 1.5 billion rubles in construction and 1.6 billion rubles in other projects, of which 369 million rubles in information technology.

The company told Interfax that the group's debt grew by 21% to 14.47 billion rubles in 2024, of which long-term and short-term loans made up 80.5%, bonds 14% and commercial and subsidized loans 5.5%. IEK Group redeemed its second bond issue, totalling 2 billion rubles, last year.

More than 17% of the total debt is long-term and the company is working on restructuring its debt burden. It began placing a third bond issue totalling 1 billion rubles on Tuesday and plans to use the proceeds to restructure its loan portfolio. IEK Group said it does not plan to further increase its debt level.

"Loans raised in 2024 were used to finance investment activity, including the purchase of a manufacturing facility with an area of 20,000 square meters in Balabanovo, Kaluga Region; the construction of a production and logistics center in Kazan; the development of existing production facilities; and the launch and outfit of new logistics facilities. The amount of annual investment in developing production totals at least 1 billion rubles," IEK Group said.

The company placed two bond issues of 2 billion rubles each in 2022-2023 and is now carrying out measures to ensure it is ready for an initial public offering in the "foreseeable future."

IEK Group includes 16 companies, including ten manufacturing facilities that make low-voltage equipment, lighting equipment, passive telecom equipment and industrial automation equipment, and develop software.

IEK Group earned 44.7 billion rubles in revenue in 2023, of which over 70% from electrical products, about 22% from lighting equipment, 4% from telecom equipment and 3% from automation equipment. The group's net profit rose 18.3% to 2.8 billion rubles and gross profit totaled 16.8 billion rubles.

IEK Group said earlier that it expected revenue to grow by more than 20% in 2024 and profit to increase by a comparable amount.

The company's principal shareholders are Alexei Stepashin and Mikhail Petrov with stakes of 38.3% each in IEK Holding. Sergei Lalakin and Igor Vorshev each hold 11.7%.