Manjushree Technopak dual track: PAG emerges lead suitor for buyout even as promoter Advent mulls IPO

Manjushree Technopak filed draft papers for a Rs 3,000-crore IPO in August (representative image)

The ongoing dual track process for Advent International-backed Manjushree Technopak is fascinatingly poised as Asia-focused private equity firm PAG has emerged as the front-runner to buy out the top packaging solutions firm even as the US private equity promoter is still considering the IPO route, multiple industry sources in the know told Moneycontrol on the condition of anonymity.

To be sure, a dual track process is a deal strategy in which the owner of the firm simultaneously pursues an initial public offering (IPO) as well as a private M&A auction process till the former finalises one option based on its needs, valuations and market conditions.

Manjushree Technopak, the largest rigid plastic packaging (RPP) player in terms of installed capacity in India, filed draft papers for a Rs 3,000-crore IPO in August, which is a combination of fresh issuance of Rs 750 crore worth equity shares, and an offer-for-sale (OFS) of equity shares worth Rs 2,250 crore by the promoter AI Lenarco Midco (Advent International), which holds 97.54 percent shareholding in the company.

"The draft papers for the Manjushree Technopak IPO were filed more than two months back and the roadshows have begun, but now, Advent has also entered advanced discussions with PAG. Advent, which is looking to unlock value after entering the firm six years back, has evaluated both the routes for several months and will take a final call and opt for one based on desired valuations and timing, among other factors," said one of the persons above.

Two other persons confirmed the ongoing discussions with PAG.

One of them added, "In an M&A scenario, Advent can explore a full exit in one shot, while post an IPO, the private equity major will still be left with a chunky stake post dilution and factors like lock-in period have to be kept in mind. Both options are on the table and more clarity can be expected in the coming weeks."

Both Advent International and PAG declined to comment in response to email queries from Moneycontrol.

Moneycontrol was the first to name PAG as one of the multiple suitors for the proposed sale process on August 23.

The August report had added that Shweta Jalan-led Advent International was targeting a premium valuation in the range of Rs 10,080 crore to Rs 15,120 crore ($1.2 billion to $1.8 billion) for the sale of the portfolio firm.

Public market valuations and private market valuations typically differ, and the valuation range currently being discussed between Advent and PAG is not immediately clear.

If PAG and Advent proceed with the deal, it could be the former's biggest buyout bet yet in India. In March 2021, PAG made an investment of $325 million in Edelweiss Wealth Management (now Nuvama), which included a primary and secondary component and acquired a majority stake.

On December 1, 2023, Moneycontrol was also the first to report that Advent was exploring strategic options to unlock value in Manjushree Technopak.

Then on December 19, 2023, Moneycontrol reported that Advent had given a joint mandate to Goldman Sachs and Avendus Capital to explore a sale of Manjushree Technopak. JM Financial, Avendus Capital, Citi, Goldman Sachs and ICICI Securities are acting on the IPO process as per the draft papers.

Asian private equity major PAG is led by Weijian Shan and has invested in Indian firms such as Nuvama, Acme Formulation Anjan Drugs, Optimus Drugs and RK Pharma. With a history going back over 27 years, PAG has built the largest fully diversified alternative investment business in the Asia Pacific region and has a combined AUM of $55 billion-plus with private equity accounting for $19 billion, as per its website.

In October 2018, Advent invested in Manjushree Technopack in partnership with the founding Kedia family. As part of the transaction, Advent purchased all the shares owned by investor Kedaara Capital and a portion of the Kedia family’s stake in Manjushree Technopack. Back then, reports said the deal valued the firm between Rs 2,300 crore to Rs 2,440 crore.

According to its draft papers, Manjushree Technopack is a derivative of the consumer industry, given its presence in the end industries such as food and beverages, home care, personal care, alco-beverage, paints and adhesives, pharmaceuticals, nutraceuticals, dairy and agrochemicals.

"With the highest market share in terms of revenue of 7.4 percent in FY23 in the organised consumer RPP industry in India, the company serves a marquee customer base including Varun Beverages, Dabur India, Marico, Honasa Consumer, Hershey India, Kansai Nerolac Paints, Pernod Ricard, and Parag Milk Foods," the draft papers add.

Other than Manjushree, the India portfolio of Advent includes the Suven Pharma-Cohance merged entity, KreditBee, Yes Bank, Tredence, Eureka Forbes, Aditya Birla Capital, DFM Foods, Modenik and Ask Investment Managers.

Earlier in June 2024, Advent sold Bharat Serums and Vaccines to Mankind Pharma in a mega Rs 13, 630 crore deal.