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Jindal Poly Films Limited signed an agreement for the sale of a minority stake in its packaging films business to Brookfield Asset Management, which, through its Special Investments program (“BSI”), and together with institutional partners (collectively “Brookfield”), has agreed to make an ₹2,000 crore investment in the company.
With this transaction, JPFL will spin off its packaging films business, which generates approximately 85 per cent of its total revenue, into a wholly owned subsidiary in which BSI will hold a minority stake. JPFL will continue to own its non-woven business unit and other corporate assets.
The structured equity investment in JPFL comprises compulsory convertible preference shares and equity shares of the new subsidiary, giving BSI a 25 per cent stake and downside protection through a ratcheted equity structure tied to financial performance, the company said in an official release. BSI has also entered into an investor rights agreement.
This strategic investment will enable JPFL “to accelerate its diversification into new businesses, while increasing profitability and growth prospects for its packaging business unit,” it said.
“We are proud to enter a strategic partnership with a large global investor such as Brookfield. Having access to their international network greatly broadens our horizons. The transaction is a testament to JPFL’s leadership position and growth potential,” said Vinod Kumar Gupta, Chief Executive Officer of JPFL.
“Brookfield’s presence on the board of this new subsidiary will also facilitate benchmarking to international governance standards and best practices,” added Gupta.
“We are pleased to partner with JPFL, India’s leading manufacturer of flexible plastic films for the packaging industry, which plays an essential role in the preservation and hygiene of products in different sectors such as food and healthcare. In partnership with Jindal, we aim to help the company maintain its strong track record of growth,” said Dev Santani, Managing Director of BSI.
“BSI is sector agnostic and invests in large-scale, non-control (minority) investments where we can provide capital and be a strategic partner to leading companies. We intend to continue to scale our BSI investments in India and be a partner of choice,” added Santani.
The transaction is subject to customary approvals and is expected to close during the first half of fiscal year 2023.
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