Blackstone acquires Essel Propack

The American multinational private equity firm has acquired a majority stake in Essel Propack, an India-based packaging company, for as much as US$460 million

April 22, 2019

Blackstone purchased a 51 per cent stake in the company from Ashok Goel Trust and its affiliates that hold a total of around 57% interest

As per the rules of the Securities and Exchange Board of India (SEBI), Blackstone’s deal will call for sale of an additional 26 per cent stake

The deal will help Blackstone grow in the fast-growing markets for FMCG and pharmaceutical items, especially in the developing economies

Besides domestic market, India has come up as a favourable base to expand operations across the Asia Pacific and Oceania regions

Blackstone Group LP, a US-based private equity firm, has acquired a controlling stake in Essel Propack, an India-based speciality packaging and manufacturing company, for as much as US$460 million, according to media reports, citing an official statement on April 22. Blackstone purchased a 51 per cent stake in the company from Ashok Goel Trust and its affiliates that hold a total of around 57% interest. Meanwhile, as per the acquisition guidelines of the Securities and Exchange Board of India (SEBI), Blackstone’s deal will call for the sale of an additional 26 per cent stake in Essel Propack. The purchase will help Blackstone grow in the fast-growing markets for FMCG and pharmaceutical items.

Essel Propack runs manufacturing operations in 10 nations and employs over 3,100 people. It had posted revenue of nearly US$380 million in 2018, marking an annual increase of 10 per cent. The acquisition will give Blackstone improved access to growing consumer markets, especially in the developing world. It aims to hold a cumulative 75 per cent stake in the Essel Propack following the close of the sale process. Packaging and logistics have recorded rising investment amid a fast growth in consumer spending across India. Earlier this month, Daifuku, a Japanese material-handling equipment company, had completed the acquisition of Hyderabad-based Vega Conveyors & Automation.

Robust growth of the Indian economy has brought a surge in need for automation in the manufacturing and logistics sectors. Daifuku’s purchase came months after LOGOS, a multinational logistics firm, bought two logistics parks in Chennai from Casagrand Group for more than US$99 million. While the logistics in India is expected to attain a market valuation of around US$215 billion by 2020, the same for packaging sector is expected to cross US$72.5 billion. Apart from catering to domestic demand in India, the nation has come up as a favourable base for foreign companies to expand operations across the Asia Pacific and Oceania. Blackstone will get better access to this region with Essel Propack.