TPG Capital investing $5M in Clearwater Capital-backed Flexituff

Private equity major TPG Capital is acquiring 5.3 per cent stake in Madhya Pradesh-based bulk container manufacturing firm Flexituff International Ltd for Rs 27 crore ($5 million) through a preferential issue, according to a BSE filing.

An investment entity of the private equity giant is to subscribe to 1,227,273 equity shares. The PE firm will also appoint a nominee on the board of the company as part of the investment.

Earlier, Flexituff board had approved the preferential allotment to raise up to Rs 30 crore at Rs 220 a share besides foreign currency convertible bonds (FCCBs) worth an additional Rs 160 crore.

TPG typically has a larger investment size than what it has committed in Flexituff. It is not immediately clear whether it will participate in the FCCB offering separately.

Flexituff scrip rose 4.1 per cent to close at Rs 237.05 a share on the BSE in a weak Mumbai market on Friday.

Founded in 1993, Flexituff International is a flexible intermediate bulk container manufacturing company which offers products like form stable baffle bags, form fitted liner bags, glued liner bags, etc.

It had earlier raised PE funding from Clearwater Capital. In 2007, Clearwater Capital Partners invested Rs 46 crore in Flexituff, picking 26.07 per cent stake. It also part-exited during the company’s IPO in 2011. At present, Clearwater holds 10.3 per cent stake in the company, which would be diluted marginally with the new investment by TPG.

For Q3 FY13, Flexituff reported net sales of Rs 247 crore with net profit of Rs 15.86 crore.

For TPG, which is one of the top global PE firms, this is the first investment in India in almost two years. It had invested in two firms in 2011 – AGS Transact and Shriram Capital. Since then, TPG exited its previous investment in Shriram Transport Finance besides apparel retail firm Lilliput Kidswear, which was reportedly a write-off.

(Edited by Sanghamitra Mandal)

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