Private equity firm Advent International is set to acquire a majority stake in Eureka Forbes Ltd (EFL), part of Shapoorji Pallonji Group (SP Group), for an enterprise value of Rs 4,400 crore.
EFL, known for its water purifiers and vacuum cleaners, is at present a subsidiary of Forbes & Company Ltd. It will be demerged into a standalone company and be listed on the BSE.
Upon its listing, Advent will have a stake of around 72.56 per cent of the company. It will subsequently make an open offer to acquire the remaining shares of the firm held with institutions.
In a regulatory filing with the stock exchanges, Forbes & Company said it will not receive any consideration from the deal as the transaction is between Shapoorji Pallonji and Company Pvt Ltd and Lunolux Ltd, an arm of Advent.
For SP Group, the transaction will enable it to trim debt estimated at Rs 20,000 crore. Of this, around Rs 11,000 crore comes under the RBI’s one-time restructuring package which gives a two-year moratorium to the group to clear its dues. It is expected to sharpen focus on the flagship construction and engineering business.
SP Group had been looking to sell EFL for some time. It is also reportedly planning to divest stakes in other companies such as Sterling & Wilson Solar. The group had to look at these options as its plans to raise funds after pledging a portion of its 18 per cent holding in Tata Sons, which was objected to by the Tatas.
The transaction is subject to closing conditions and receipt of relevant statutory and regulatory approvals. Though the announcement was made late on Sunday evening, an SP Group statement was silent on when the process will be completed. Advent was competing with Warburg Pincus, and Swedish home appliance maker Electrolux
“We are pleased that Eureka Forbes Ltd, a jewel in the Shapoorji Pallonji Group, has found a new home with Advent, while at the same time unlocking value for shareholders. This transaction also reflects our stated objective and strategy of significant de-leveraging and focusing on our core competencies and businesses,” said Jai Mavani, executive director, Shapoorji Pallonji and Company Pvt Ltd.
