Brookfield to invest $263 million for minority stake in Jindal Poly Films

This is one of the largest private equity deals in India’s packaging industry, which has seen significant interest over the years from overseas investors including Blackstone, Warburg Pincus and Advent International, and domestic investors such as JM Financial PE and Premji Invest.

Brookfield’s special investment program BSI along with institutional partners will buy a 25% stake in a new entity that Jindal Poly Films will house its packaging film business, which accounts for approximately 85% of its total revenue, Brookfield said in a statement.

Mumbai-listed Jindal Poly will retain 75% ownership of the new entity, to be called JPFL Films Pvt Ltd. It will also continue to own its non-woven business unit and other corporate assets.

“BSI is sector agnostic and invests in large-scale, non-controlling (minority) investments where we can provide capital and be a strategic partner for leading companies. We look forward to continuing our BSI investments in India. and want to be the partner of choice, said BSI Managing Director Dev Santani.

Brookfield’s structured equity investment in JPFL consists of Compulsory Convertible Preference Shares (CCPS) and new subsidiary equity shares, which provide BSI a downside protection through a ratchet equity structure linked to financial performance. In addition, BSI has signed an investor rights agreement.

The transaction, which is subject to customary approval, is expected to close during the first half of fiscal year 2023.

JPFL will be able to accelerate its diversification into new companies as a result of this strategic investment, while also enhancing the profitability and growth prospects for its packaging business unit. The company manufactures flexible plastic films and non-woven fabric products. It provides products in specialty films through its single location plant in Nashik, Maharashtra. Its products are used in food and cosmetics, label, other fields.

generate packaging film business 3,473 crore in revenue for the year up to March 2021.

Brookfield has been operating in India for over 11 years and currently manages $20.6 billion in assets across infrastructure, real estate and renewable energy.

Its investment in Jindal Poly comes at a time when the packaging business has witnessed significant M&A activity.

in November, Warburg Pincus Backed Parksons Packaging Ltd. Folding carton maker Manohar Packaging acquired and about a year ago, domestic JM Financial PE invested in 60 crore ($8.3 million) in Gujarat-based Canpac Trends Pvt Ltd.

Last year in August 2021, Manjushree Technopack said it would acquire a majority stake in Classy Containers, while Premji Invest, the family office of Wipro’s Azim Premji, bought a significant stake in Delhi-based SB Packaging.

In one of the largest purchases in the Indian packaging industry, US-based Blackstone had acquired Piramal Glass at an enterprise value of $1 billion in December 2020 and Essel ProPack for $470 million in 2019.

In 2018, Advent International exits Kedara Capital and bought a controlling stake in plastic packaging material manufacturer Manjushree Technopack. The company has since added Pearl Polymers and National Plastics to its portfolio.