US private equity investor Advent International has acquired Bengaluru-based packaging solutions company Manjushree Technopack, in a deal that paved the way for a full exit for homegrown PE firm Kedaara Capital, according to a statement.
As part of the deal, Advent has acquired all the shares held by Kedaara Capital, and a portion of the promoter Kedia family’s stake in Manjushree Technopack. Kedaara Capital and Ladoga Holdings Ltd had jointly picked up a 24 per cent stake in the packaging company in 2015 for about $23 million.
According to an Economic Times report, however, Kedaara held 40 per cent stake in Manjushree at the time of exit.
Manjushree founder and managing director Vimal Kedia, now a minority shareholder, and the rest of the company’s senior management team will remain involved in the business, the statement added. Financial terms of the transaction were not disclosed.
In August, The Economic Times had reported that Advent was competing with Bangkok-based SCG Packaging for Manjushree, valuing India’s largest PET manufacturer at about $330 million. Other private equity firms The Carlyle Group and KKR, and US-based companies IPG Inc. and Graham Packaging Inc. were also in the fray, the newspaper earlier reported.
“The rigid plastic packaging market is expected to expand 15% per year over the next five years, driven by underlying growth in consumer end markets, the continued shift from glass and paper to plastic packaging and the introduction of new products,” said Shweta Jalan, Managing Director and head of India for Advent International.
“We see significant opportunities to accelerate Manjushree’s growth by investing in innovation and new business development, expanding into adjacent geographies, segments and business lines, and acquiring other packaging companies,” added Pankaj Patwari, a director at Advent International.
The acquisition comes more than a year after Advent had acquired Dixcy Textiles Pvt. Ltd, the South Indian firm which sells leading innerwear brand Dixcy Scott. Advent has been investing in India for 11 years and opened a Mumbai office in 2009. Including Manjushree, Advent has invested approximately 60 billion rupees (nearly $1 billion) in seven companies with headquarters or operations in India including Crompton Greaves Consumer Electricals, QuEST Global Services, ASK Group, CARE Hospitals, and Computer Age Management Services.
Globally, the firm has invested in over 340 private equity transactions in 41 countries and as of June 30, 2018, had $41 billion in assets under management.
The Manjushree deal would be the second largest buyout in the Indian packaging industry after Finnish firm Huhtamaki Oyj acquired Mumbai-based Positive Packaging in 2014 for $336 million, The Economic Times report said.
“When Kedaara invested in Manjushree, we saw a unique and scaled consumer derivative play backed by a high-quality management team in the fragmented rigid packaging industry. During our investment term, the business continuously outgrew the Indian consumer and packaging sector and generated significant value for Kedaara and its investors,” Sunish Sharma and Manish Kejriwal, Managing Partners of Kedaara Capital Advisors LLP, said.
Established in 1983, Manjushree Technopack serves a wide range of FMCG vertical markets, including home care and personal care products, food and beverages, pharmaceuticals, dairy and edible oil. It counts GlaxoSmithKline, Coca-Cola, Nestle, Mondelez, PepsiCo, Reckitt Benckiser, Dabur, Perfetti Van Melle and Patanjali among its clients.
The company reported a turnover of Rs 8.9 billion ($127 million) for the fiscal year ended March 31, 2018, and a total manufacturing capacity of over 150,000 million tonnes per annum across seven manufacturing sites within India. The company currently exports to the Asia Pacific, Middle East and Africa, and North America.
“We appreciate the support we’ve received from Kedaara over the past three years in promoting new business development, strengthening the management team, streamlining sales management processes and driving geographic expansion to build a pan-India presence. With the Indian rigid packaging industry expected to double over the next few years, we will look to further strengthen our foothold,” Kedia said.
Kedaara Capital pursues control and minority investment opportunities in India, and has made 10 investments since 2014 across diversified verticals, including consumer and consumer derivatives, financial services, industrial and healthcare. The firm had also invested in another packaging firm Parksons Packaging in March 2015.
The total funds managed and advised by the Kedaara team is over $1.5 billion.