Advent to acquire Eureka Forbes from Shapoorji Pallonji Group

 Advent to acquire Eureka Forbes from Shapoorji Pallonji Group

Private equity firm Advent International has signed an agreement to acquire a controlling stake in Eureka Forbes Ltd from Shapoorji Pallonji Group, in its third India transaction and the second buyout since January this year.

The deal pegs an enterprise value of Rs 4,400 crore ($597 million) on Eureka Forbes, the PE firm and Shapoorji Pallonji Group said in a statement.

Eureka Forbes, a fully owned unit of Mumbai-listed Forbes & Company Ltd, will be demerged into a standalone firm and then be listed on the BSE. Upon listing, Advent will buy up to 72.56% of the company’s then outstanding stock on a fully diluted basis from the promoters. It will then make an open offer to minority shareholders.

This is similar to a deal that Advent struck a few years ago with Crompton Greaves where the consumer business was carved out from the publicly listed company as a separate listed entity in which it picked up a stake.

Previously synonymous with vacuum cleaners, Eureka Forbes pivoted to add other verticals in the water purifier business via its brand Aquaguard. It has built a multi-channel network with a direct sales business, besides a retail presence in over 20,000 outlets and an e-commerce channel. It has an installed base of over 20 million customers.

“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.

Shweta Jalan, managing director at Advent India PE Advisors, said Eureka Forbes is “the No. 1 player in an under-penetrated market poised for strong growth” over the next several years.

Advent has been investing in India since 2007 and opened its Mumbai office in 2009. It has invested or committed $2.2 billion in 16 companies with headquarters or operations in India across sectors such as consumer products, financial services, healthcare, industrial and technology.

Earlier this year, it inked a buyout deal for ZCL Chemicals and participated in a late-stage funding round of tech startup Zenoti.

In India, Advent has made four consumer investments—Crompton Greaves Consumer Electricals, Dixcy Textiles, Enamor and DFM Foods. Eureka Forbes will be Advent’s fifth buyout in the consumer sector.

Standard Chartered Bank is serving as sole financial advisor and Desai & Diwanji is acting as legal counsel. Katalyst Advisors Pvt Ltd is acting as structuring and tax advisor.

Boston Consulting Group is acting as the commercial due diligence and strategic advisor. KPMG India is acting as financial diligence advisors to the Shapoorji Pallonji Group in this transaction.

Vivek Sinha

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