Blackstone has engaged top investment bank Morgan Stanley as an advisor as the private equity giant looks to sell its majority stake in listed portfolio firm and leading global speciality packaging company EPL Ltd (formerly Essel Propack), three persons in the know told Moneycontrol on the condition of anonymity.
On October 30, 2024, Moneycontrol was the first to report that the US investment major was exploring a strategic review of EPL Ltd.
"Morgan Stanley has been taken on board recently as the sell-side advisor. The sale process hasn't been launched yet, but the target is to find a suitable buyer by March 2025. This is intended to be a full stake sale and not a partial one and Blackstone is expecting a significant premium in terms of valuation," said one of the persons cited above.
Blackstone, the promoter, holds a 51.47 per cent stake in EPL Ltd.
At the end of day's trade on January 2, the firm's market cap stood at around Rs 8,361 crore. At those levels, Blackstone's controlling stake is valued at around Rs 4,303 crore. EPL's share price has risen by around 32 per cent in the last year.
A second person added, "Blackstone invested back in 2019, so this is a mature portfolio firm and there is preliminary interest in the transaction from both strategic suitors and private equity players."
In September 2020, Blackstone sold 23 percent stake in Essel Propack via the block deal route for around Rs 1,850 crore ($252 million).
Block deals have been used by several private equity firms to exit listed portfolio companies, but according to a third person familiar with the transaction, "Blackstone is not looking at the block deal option this time and is keen on a complete exit at one go via the M&A route."
In response to an email query from Moneycontrol, Blackstone declined to comment. Emails sent to Morgan Stanley and EPL Ltd were left unanswered at the time of publishing this article.
Incidentally, Morgan Stanley acted as the financial advisor to the sellers and their affiliates in 2019 when Blackstone acquired Essel Propack (now EPL Ltd).
In April 2019, Blackstone committed up to $460 million to acquire a majority stake in EPL, as per an official announcement. According to reports, the private equity fund had beaten rival suitors like French major Albea and Indorama who had also bid for the asset.
In recent M&A action in the packaging segment, on November 22, Moneycontrol reported that Asia-focused private equity firm PAG had signed definitive agreements to acquire a substantial majority stake in Advent International- promoted Manjushree Technopack, in a transaction with an enterprise value of around $850 million-$950 million for the entire firm.
A closer look at EPL
For FY23-24, the Mumbai headquartered company registered revenue and net profit of Rs 1,280.50 crore and Rs 176.30 crore, respectively.
According to its FY23-24 annual report, EPL provides sustainable solutions through 21 advanced manufacturing facilities across 10 countries: Brazil, China, Colombia, Egypt, Germany, India, Mexico, Philippines, Poland, and the USA.
"With an annual production of over 8 billion tubes, EPL manufactures one in every three tubes used in the oral care category across the globe. We are trusted by leading brands in Beauty & Cosmetics, Food, Pharma & Healthcare, and Home Care sectors," the report added.
EPL's MD and Global CEO Anand Kripalu said in the annual report, "We remain market leaders in Oral Care, and while building on this momentum, we aim to drive significant growth in Beauty & Cosmetics and Pharma. This year, our Non-Oral category grew by 8.1%, outpacing the 5% growth in Oral Care."
He added, "We are in a strong position today, evidenced by our consistent progress in recent quarters. Our strategic initiatives are guiding us towards achieving double-digit growth with a 20% EBITDA margin."
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