Jindal Poly Films signs an agreement with Brookfield

Brookfield to buy 25% stake of BC Jindal Group

726
Brookfield has invested 2000 crore in the packaging business of BC Jindal Photo Credit: iStockphoto
Brookfield has invested 2000 crore in the packaging business of BC Jindal Photo Credit: iStockphoto

As a transaction’s part, the packaging films business will be carved out by Jindal Poly into a subsidiary, and through a special investment program, the funds will be infused by Brookfield Asset Management, according to both the companies.

A definitive agreement has been signed by BC Jindal Group organization’s Jindal Poly Films with Brookfield, a Canadian investor, for raising about Rs 2000 crore by selling a valuable minority stake in the business of packaging films.

The asset manager of Canada, Brookfield, has promised to gather a 25% stake in the business of packaging of the BC Jindal Group in a deal of Rs 2000 Crore. It further boosts the 2022’s Indian private equity investments.

The group will transfer the business of packaging films from JPFL to an entirely-owned subsidiary through a slump sale, and after this, Brookfield will invest in the arm.

Jindal Poly Films and Brookfield

The packaging films business has accounted for Rs 3,473 crore (85%) of JPFL’s revenue of Rs 4,082 crore in FY21. After the demerger, the entity listed will be left with the non-woven fabrics applied in baby diapers and hygiene and a few other corporate assets.

Toronto-based Brookfield has been present in India for over 11 years and possesses assets under the management of more than US$20 billion which is approximately Rs 1,51,907 crore. It will receive two seats on the JPFL film’s board. JPFL Films is going to house the business of packaging films.

In JFPL, the structured equity investment contains the new subsidiary’s equity shares and the mandatory convertible preference shares. According to the company, it offers Brookfield a stake of 25% along with good downside protection through a powerful equity structure closely connected to the financial performance.

The subsidiary has generated about 85% of the firms’ total revenues. In addition, Jindal Poly and several corporate assets will continuously own the non-woven business unit.

But Jindal Poly’s shares have lost 6.7%. It is an underperforming sensex that has achieved 1.84% on the last trading day of this week. The deal’s sole advisor was Rothschild.

Through holding trusts and companies, BC Jindal’s family owns JPFL. An expert team is responsible for managing the company, and no promoters have got any presence on the board of directors. Also, the family has dominated the Indian power and steel sectors.

Best practices to be followed

The presence of Brookfield on the new subsidiary’s board will support benchmarking to the standards of international governance and the best practices, according to the chief executive officer of JPFL, Vinod Kumar Gupta.

One of the leading companies globally that makes non-woven fabrics products and flexible plastic films is JPFL.

“BSI agnostics sector invests in non-control or minority and large-scale investments where the company can offer capital and become a powerful strategic partner to all the leading companies. Therefore, the company will continue to scale its Indian BSI investments and become a choice partner”, according to the managing director of BSI, Dev Santani.

BOPET’s role in different sectors

The 8th largest manufacturer of Biaxially Oriented Polyethylene Terephthalate (BOPET) films is JPFL. BOPET is used in products’ packaging in several end-use sectors like cosmetic and personal care products, food and beverages, pharmaceuticals, and electrical and electronics. Besides, it possesses a powerful rank in the market of highly valuable metalized films.

According to Shivam Bajaj, the chief executive officer and founder of Avener Capital, “The packaging industry is propelling drastic expansion in the country in terms of exploding logistics and eCommerce landscape. By having this deal, Brookfield focuses on tapping into the opportunity by getting into a partnership with a well-established business house in the field.”

The impact, resilience, and growth of responsible packaging in a wide region are daily chronicled by Packaging South Asia.

A multi-channel B2B publication and digital platform such as Packaging South Asia.is always aware of the prospect of new beginnings and renewal. Its 16-year-old print monthly, based in New Delhi, India has demonstrated its commitment to progress and growth. The Indian and Asian packaging industries have shown resilience in the face of ongoing challenges over the past three years.

As we present our publishing plan for 2023, India’s real GDP growth for the financial year ending 31 March 2023 will reach 6.3%. Packaging industry growth has exceeded GDP growth even when allowing for inflation in the past three years.

The capacity for flexible film manufacturing in India increased by 33% over the past three years. With orders in place, we expect another 33% capacity addition from 2023 to 2025. Capacities in monocartons, corrugation, aseptic liquid packaging, and labels have grown similarly. The numbers are positive for most of the economies in the region – our platform increasingly reaches and influences these.

Even given the disruptions of supply chains, raw material prices, and the challenge of responsible and sustainable packaging, packaging in all its creative forms and purposes has significant headroom to grow in India and Asia. Our context and coverage engulf the entire packaging supply chain – from concept to shelf and further – to waste collection and recycling. We target brand owners, product managers, raw material suppliers, packaging designers and converters, and recyclers.

In an admittedly fragmented and textured terrain, this is the right time to plan your participation and marketing support communication – in our impactful and highly targeted business platform. Tell us what you need. Speak and write to our editorial and advertising teams! For advertisement ads1@ippgroup.in , for editorial info@ippgroup.in and for subscriptions subscription@ippgroup.in

– Naresh Khanna

Subscribe Now

LEAVE A REPLY

Please enter your comment!
Please enter your name here