Everstone Capital puts plan to acquire Kenstar on backburner

Everstone Group co-founder Atul Kapur speaks at DEALSTREETASIA's Asia PE-VC Summit 2017

Private equity (PE) firm Everstone Capital has put its plan to acquire Videocon Group-owned home appliances brand Kenstar on the backburner, two people close to the development said.

The people cited above said the insolvency proceedings against Videocon Industries was key to Everstone’s decision to back out of the deal.

Last November, the private equity firm had entered into an agreement to acquire the company. Under the agreement, the existing management team at Kenstar, led by business head Rajiv Kenue, was to continue running the business.

On 6 June, the Videocon Group company was admitted by the National Company Law Tribunal (NCLT) for resolution under the insolvency and bankruptcy code (IBC).

Kenstar is the second-largest seller of air coolers in India, the private equity firm said in its statement announcing the transaction.

“While Videocon Group businesses had been facing headwinds, Kenstar was an exception. It is a standalone company and is a strong brand. The insolvency proceedings, however, have put a spanner in the works,” said one of the people cited above, requesting anonymity.

An Everstone Capital spokesperson said that the information was “not accurate” and the firm has “no further comments to offer at this point in time”.

It could not, however, be immediately ascertained if the distressed asset vertical of Everstone would be keen on evaluating the deal as a resolution applicant. The resolution professional for Videocon Industries could not be reached for a comment.

The State Bank of India (SBI) filed its insolvency petition against Venugopal Dhoot-controlled Videocon Industries in January before the NCLT, which admitted the plea on 6 June.

Videocon is in the so-called second list of 28 defaulters that the Reserve Bank of India (RBI) had directed for resolution under new bankruptcy code.

In February, the company had filed a writ petition before the Bombay high court seeking a stay on the bankruptcy proceedings.

Videocon had moved the high court against Reserve Bank of India’s decision not to extend the timeline as requested by the State Bank of India and the joint lenders’ forum to re-rate Videocon’s restructuring proposal, following changes in cash flows after the changes in the government’s import duty policy.

According to Videocon’s FY17 annual report, the company was liable to repay ₹5,082 crore as on 31 March 2017. Its total debt stood at ₹19,506 crore as in March 2018.

On 9 June, the NCLT had also admitted the insolvency petition filed by SBI against Videocon Telecommunications Ltd.

Everstone, which is focussed on India and Southeast Asia, has assets under management of approximately $4 billion.

It has offices in Singapore, Mumbai, Delhi, Bengaluru, Mauritius and London. The private equity firm has a strong focus on the consumer sector.

In April 2016, the private equity firm had acquired Hindustan Unilever Ltd’s bread and bakery division under the Modern brand. It has also built businesses, such as Burger King’s India franchise, from scratch.

Everstone’s investments in the consumer sector includes Modern Foods, Ritu Kumar, S. Chand Group, Ozone, Burger King India, Burger King Indonesia and Domino’s Indonesia, besides several other marque restaurant brands.

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This story was first published on livemint.com