American buyout firm Advent International has agreed to buy a majority stake in Eureka Forbes Ltd, the consumer durable flagship of Shapoorji Pallonji Group and a household name in the vacuum cleaner and water purifier segments, for ₹4,400 crores.
Eureka Forbes Ltd, a unit of Forbes and Co. Ltd will be separated from the parent and listed on BSE, the two companies said in a joint statement on Sunday.
“Upon listing of Eureka Forbes, Advent will purchase up to 72.56% of the company’s then outstanding stock on a fully diluted basis from Shapoorji Pallonji Group. Advent will thereafter make an open offer in compliance with applicable regulations,” the statement said.
The transaction will help Shapoorji Pallonji Group pare its debt and focus on other businesses. Of the group’s total debt of ₹20,000 crores, ₹10,900 crore is under a one-time restructuring package under the COVID-19 relief framework regulations of the Reserve Bank of India, giving the 150-year-old conglomerate easier payment terms to clear the dues.
The SP Group had proposed to raise ₹10,332 crores through the monetization of these assets. It is also trying to sell other group companies, including Sterling and Wilson Solar, one of the largest solar EPC (engineering, procurement, and construction) solutions providers, and Afcons Infrastructure, a construction and engineering company.
Standard Chartered Bank advised SP Group on the Eureka Forbes transaction.
“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, and chief executive of Eureka Forbes.
Eureka Forbes has a customer base of 20 million and a presence in 450 cities and towns in India. The company sells its products through a multi-channel network, including direct sales, 20,000 outlets, and the e-commerce channel. In addition, it has a global footprint in 53 countries.
“We are excited to partner with the management team of Eureka Forbes 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 Pvt. Ltd.
Private equity firm Warburg Pincus and Swedish home appliance maker Electrolux were also in the race to acquire Eureka Forbes.
Advent has been investing in India since 2007 and has put in $2.2 billion in 16 companies across consumer products, financial services, healthcare, industrial, and technology industries.
Eureka Forbes will be Advent’s fifth acquisition in the consumer sector in India. The other four are 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).