Max Ventures & Industries Ltd (MaxVIL), a holding company of the Max Group, on Monday, said it has entered into a definitive agreement with its existing Japanese partner, Toppan Inc., in Max Specialty Films Ltd (MSF). This has been done with the aim to divest its remaining 51% stake in the specialty packaging films business for an enterprise valuation of ₹1,350 crore (around $182 million).
As part of the deal, Toppan would also be taking over the debt of MSFL.
Toppan became a strategic partner of MaxVIL after the acquisition of 49% stake in 2017 for about Rs 200 crore. MaxVIL operates in the real estate and specialty packaging films business. The company said it has decided to exit from the non-core businesses.
Max Speciality Films is one of the manufacturers of Biaxially Oriented Polypropylene (BOPP) films, including specialty packaging, labels, coating and thermal lamination films.
Post this exit, the company said it will focus on the real estate business in the premium residential and commercial space in Delhi-NCR.
“The decision to divest our residual 51% stake in specialty packaging business to the existing partner is to generate additional growth capital to deploy in the real estate business that offers tremendous growth opportunities.” Sahil Vachani, MD & CEO of MaxVIL, said in a statement.
He added “Backed by a successful track record of developments in the commercial space such as Max Towers and Max House, strength of differentiation in design, end-user experience, and the overall impeccable governance of the Max Group; MaxVIL is well-positioned to scale both its commercial and residential businesses, and deliver substantial value to all stakeholders,”
The exit from the packaging business, at a valuation of more than 3x to the 49% stake sale in 2017, coincides with the company’s best performance since its inception.
Post divestment, the company will have a war chest of more than Rs 1,000 crore from sale proceeds, internal accruals, and potential commitment from financial investors. The company will also change its name from MaxVIL to Max Estates Ltd.
The funds will help the company expand its residential and commercial real estate footprint in Delhi-NCR, it said in a statement.
New York Life Insurance Company, a longstanding partner of the group, is a strategic investor in the company, owning about 23% stake. It has also invested at the project level through the SPVs (Special Purpose Vehicles) route by picking up a 49% stake in Max Square, a commercial project on the Noida-Greater Noida Expressway. The company said it will continue to look for such strategic/financial partners to back its expansion plans.
MaxVIL announced its financial results for the second quarter (Q2) of FY22. The company posted a consolidated net profit of Rs 12.06 crore during the July-September quarter of this fiscal year vs a net loss of Rs 11.48 crore in the year-ago period.