After a long wait, the Shapoorji Pallonji Group has closed the sale process of its consumer durables business under the Eureka Forbes label by picking the American private equity fund Advent International’s Rs 4,400-crore offer for a 72% stake.
The sale process, which began in November 2019, will help the over 156-year-old SP Group pare the debt pile and sharpen the focus on the flagship construction and engineering business under Afcons.
The valuation of Rs 4,400 crore for a 72.56% stake is at an enterprise level and subject to closing adjustments and also includes an open offer for the remaining stake after the demerger and listing of Eureka Forbes, the SP group said in a statement on Sunday.
The 156-year-old-Shapoorji Pallonji Group, which owns over 18% in the Tata Group, is sitting on a debt pile of over Rs 20,000 crore of which around Rs 12,000 crore are under the moratorium till 2023 allowed by the RBI to help borrowers tide over the cash flow issues arising from the pandemic.
“According to a scheme of the arrangement, Eureka Forbes, a 100% subsidiary of Forbes & Company, will be demerged into a standalone company and will be listed on the BSE. Upon demerger and listing, Advent will purchase up to 72.5% of Eureka Forbes's then outstanding stock on a fully diluted basis from SP Group-owned Forbes & Co, and will also make an open offer for the remaining stake.
“The transaction is subject to closing conditions and receipt of the relevant statutory and regulatory approvals,” the statement said without offering a timeline for the demerger and listing.
When contacted, Jai Mavani, executive director at Shapoorji Pallonji & Company told PTI that the Rs 4,400 crore valuation is for the entire stake in the company, which means including the valuation cost of the open offer.
But he could not offer a timeline for the process to complete as the demerger process is pending before the Mumbai NCLT.
This transaction also reflects the company's stated objectives and strategy of significantly de-leveraging and focusing on core competencies and businesses, Mavani said.
“We look forward to working with Marzin Shroff and his team to guide Eureka Forbes next phase of growth and solidify its market leadership,” said Shweta Jalan, managing director, Advent India PE Advisors.
“Having delivered innovative products and solutions for our ever-growing customer base, we are now buoyant about the opportunity to unlock further growth," Marzin R Shroff, managing director and chief executive of Eureka Forbes.
(With inputs from PTI)
