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.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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– Naresh Khanna

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