Shapoorji Pallonji sells Eureka Forbes to Advent International for Rs 4,400 crore

On Sunday, the Shapoorji Pallonji Group announced the sale of its Eureka Forbes consumer durables company to Advent International, an American private equity firm. The PE firm will acquire a controlling interest of 72.56% in the business, which will be run as a separate entity, as part of a Rs 4,400 crore deal, said reports. The sale will assist the 156-year-old Shapoorji Pallonji Group in reducing its debt, which now stands at Rs 10,900 crore, as it seeks to focus on its core construction and real estate industries.

Eureka Forbes would be demerged into a standalone business and then listed on the BSE, according to the terms of the deal. Advent will buy the majority of SP Group's shares after the company is listed, and the PE firm will then make an open bid in accordance with the Sebi takeover code, said reports. According to the SP Group, the valuation of Rs 4,400 crore for a 72.56% interest is at an enterprise level and subject to closing adjustments. Eureka Forbes, a wholly-owned subsidiary of SP Group firm Forbes & Company, is active in the areas of water purification, vacuum cleaning, and health and safety solutions.

Eureka Forbes market valuation

"We are delighted that Eureka Forbes, a jewel in the SP Group, has found a new home with Advent, generating value for shareholders at the same time. This acquisition also reflects our stated goal and strategy of de-leveraging and focusing on our core strengths and businesses," said Jai Mavani,  Shapoorji Pallonji and Company Pvt Ltd's executive director.

SP Group's financial adviser is Standard Chartered Bank, while legal counsel is Desai & Diwanji, structuring and tax advice is Katalyst Advisors, commercial due diligence and strategic advice is provided by Boston Consulting Group, and financial advice is provided by KPMG India.

Highlights from the deal

• Eureka Forbes, a wholly-owned subsidiary of Forbes & Co., will be spun off and listed on the Bombay Stock Exchange Ltd.
• Following the IPO, Advent will buy up to 72.56% of Shapoorji Pallonji Group's then-outstanding stock on a fully diluted basis.
• Closing conditions and all necessary statutory and regulatory clearances must be met before the transaction may be completed.
• Advent will then extend an open invitation. As of September 17, Forbes & Co. has a total market capitalization of Rs 5,140 crore.

Eureka Forbes would be Advent's eighth consumer sector purchase since 2007. Advent has been investing in India since 2007. Crompton Greaves Consumer Electricals, Dixcy Textiles, Enamor, and DFM Foods were among the four consumer investments made by the PE company previously. Advent has invested or committed $2.2 billion in 16 firms with headquarters or activities in India over the last 14 years, in industries as diverse as consumer goods, financial services, healthcare, industrial, and technology, said reports.

Image: PTI/ ShapoorjiPallonji.com