American private equity (PE) firm Warburg Pincus on Monday said its affiliate Green Fin Investments BV has acquired a majority stake in Parksons Packaging Ltd, it said in a statement.
As part of the transaction, existing PE investors Kedaara Capital AIF 1 and Olza Holdings Ltd and IIFL have fully exited their investment in Parksons and the promoter Kejriwal family has sold a partial stake, Warburg said. Family members Ramesh Kejriwal, Siddharth Kejriwal and Chaitanya Kejriwal will continue to retain their current positions of chairman, managing director and joint managing director, respectively, and will drive the business going forward, it added.
Financial details of the transaction were not disclosed. However, a banker aware of the details said that Warburg has acquired around 80% stake in the company at an enterprise value of around ₹2,200 crore.
The company recorded revenue of around ₹1,000 crore last fiscal, he added. Parksons revenues have grown at a compound annual growth rate of 15.5% over the last five fiscals through FY20 while maintaining a healthy double-digit operating margin, rating agency Crisil Ltd said in a September report.
The deal highlights a growing PE interest in packaging businesses in India driven by rising demand for packaging of household, medical, edible and lifestyle products in Asia’s third largest economy.
PE firm Blackstone acquired glass packaging major Piramal Glass in December for close to $1 billion. It had earlier acquired a 75% stake in Essel Propack in 2019 for $470 million.
“The paper packaging market is expected to demonstrate strong growth over the next five years, driven by underlying expansion in consumer end markets, further bolstered by secular tailwinds of sustainability and premiumization," said Vishal Mahadevia, managing director and head of India at Warburg Pincus.
Parksons claims to be India’s largest independent folding carton manufacturer with a diversified product portfolio and over 300 customers across consumer, food, pharmaceutical and other end-markets.