Mumbai: American private equity major Advent International has signed a definitive agreement to acquire a majority stake in Eureka Forbes Ltd, the consumer durable flagship company of the 150-year-old diversified conglomerate, Shapoorji Pallonji Group (SPG) and a household name in the vacuum cleaner and water purifier segments, at a enterprise valuation of Rs 4,400 crore.
Pursuant to a scheme of arrangement, Eureka Forbes Ltd (EFL), a 100% subsidiary of Forbes & Company Ltd will be demerged into a standalone company and then be listed on the Bombay Stock Exchange, the company said on Sunday.
"Upon listing of EFL, Advent will purchase up to 72.56% of the company’s then outstanding stock on a fully diluted basis from SPG. Advent will thereafter make an open offer in compliance with applicable regulations," the company said in a statement.
The transaction will help Shapoorji group pare its Rs 20,000 crore total debt and focus on other businesses. Of the total debt, Rs 12,000 crore is under the covid-19 relief framework regulations of the Reserve Bank of India, which will provide SPG time till 2023 to clear the dues.
As part of this effort is also the sale of its Sterling & Wilson Solar, one of the largest solar EPC (engineering, procurement and construction) solutions providers and Afcons Infrastructure, a construction and engineering company. The group had proposed to raise Rs 10,332 crore through the monetisation of these assets.
"Having delivered innovative products and solutions for our ever-growing customer base, we are now buoyant about the opportunity to unlock further growth and are excited to embark on this new journey with the promise of a better tomorrow," said Marzin R Shroff, Managing Director & CEO, EFL.
Over the last decades, EFL has become a household name with strong market leadership and brand equity. With a customer base of 20 million and presence in 450 cities and towns in India, the company has built a multi-channel network with a unique direct sales business, strong retail presence in over 20,000 outlets, and a fast-growing e-commerce channel. It has a global footprint in 53 countries.
“We are excited to partner with the management team of Eureka Forbes Limited and apply Advent’s value creation playbook to build one of India’s home-grown consumer durables champions, which will continue to be known for innovative products and best-in-class customer service” said Sahil Dalal, Managing Director, Advent India PE Advisors Private Limited.
Along with Advent, investment firm Warburg Pincus and Swedish home appliance manufacturer Electrolux were in the race to acquire EFL.
Advent, which has been investing in India since 2007 and has committed $2.2 billion in 16 companies in India across sectors such as consumer products, financial services, healthcare, industrial and technology.
EFL will be Advent’s fifth buyout in the consumer sector. In India, it has made four consumer investments, including Crompton Greaves Consumer Electricals, (consumer electrical goods company); Dixcy Textiles, (men’s innerwear brand); Enamor, (women’s innerwear brand); and DFM Foods, (producer of packaged savory snacks).
Standard Chartered Bank served as sole financial advisor for the transaction which is subject to closing conditions and receipt of relevant statutory and regulatory approvals.