Blackstone sells 23% stake in Essel Propack for Rs 1,861.5 crore

Essel Propack strengthens performance under new management

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Essel Propack
Oral care is Essel’s core segment Photo: Essel Propack

On 18 September 2020, US-headquartered equity investor and asset manager Blackstone divested 23% of its 75% holding in Essel Propack. It acquired 75% of Essel Propack on 22 August 2019, for US$ 470 million at Rs134 per share, from its earlier promoters Essel Group and the public. The sale at Rs. 256.50 a share brought Blackstone approximately Rs 1,861.5 crore or US$ 252 million. Thus Blackstone has recovered 53.6% of its investment back for divesting only 30.66% of its shareholding in Essel Propack. Blackstone will continue to own 52% of the company and has said it has no further divestment plans.

Blackstone said, “Within 13 months of investment, Blackstone has returned US 252 million by selling 23% of the company’s shares at Rs 256.5 per share. This implies a 106% IRR / 2.2x Multiple of Money in USD on Blackstone’s equity, net of debt at Holding company.” Since the acquisition, Blackstone has brought in a new CEO and other senior executives and launched a productivity improvement program that has helped bring about a 170 bps expansion of margins and 400 bps of ROCE improvement.

Apparently, the shares were sold to create liquidity in the stock, given significant investor interest after the company’s strong performance. The 23% shareholding represented those acquired in the open offer and have been sold back to local and global investors. Institutional investors who purchased the 23% shares included Axis MF, IDFC MF, Aditya Birla Sun Life MF, Nomura, Franklin Templeton MF, DSP MF, Government Pension Fund Global, and Neuberger Berman.