UPL eyes debt reduction, sells 8.93% stake in Advanta for Rs 2,100 cr, announces Rs 3,378-cr rights issue

Also read | UPL to raise up to Rs 3,378 crore via rights issue at Rs 360 per share

This deal marks the second major external investment in Advanta Enterprises, following a $300 million investment by KKR in October 2022. Post-transaction, Advanta will continue to be majority-owned by UPL with a 74.7 percent stake, while KKR and Alpha Wave will hold 12.86 percent and 12.44 percent, respectively.

The agreements were signed on 19 November 2024, and the transaction is expected to close by 31 March 2025, subject to regulatory approvals, including from the Competition Commission of India.

Utilisation of funds: UPL seeks to deleverage balance sheet

UPL said it will use the $250 million proceeds from the secondary stake to reduce debt, in line with the company’s stated financial objectives. Advanta will use the $100 million primary equity infusion to accelerate its growth, focusing on both organic expansion and strategic acquisitions. AEL aims to tap the robust demand for agriculture products.

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Separately, UPL approved a rights issue of partly paid-up equity shares. The issue price is set at Rs 360 per share, including a premium of Rs 358 per share, with eligible shareholders entitled to one equity share for every eight held as of the record date, 26 November 2024. The rights issue will open on 5 December 2024 and close on 17 December 2024.

Advanta operates across more than 80 countries, catering to both smallholder farmers and commercial farming operations. The company’s diverse portfolio includes high-yield, climate-smart solutions for crops such as corn, sunflower, canola, sorghum, and various vegetables. It has a strong market share in tropical yellow corn markets like India, Thailand, and Latin America, as well as in sunflower and sorghum in Argentina.

The transaction, which was facilitated by JM Financial Limited, is expected to close by 31 March 2025, subject to customary regulatory approvals, including clearance from the Competition Commission of India.

As of the financial year ending March 2024, Advanta contributed Rs 4,148 crore in revenue, representing 9.62 percent of UPL’s consolidated revenue, and had a net worth of Rs 3,938 crore, accounting for 15.87 percent of UPL’s consolidated net worth. This strategic transaction underscores UPL’s ongoing efforts to unlock value from its subsidiaries while maintaining majority ownership in its high-growth platforms.

UPL share price gained 1.84 percent on November 19 ahead of the announcement, and has risen about 6 percent in the last five days, taking the market capitalisation to over Rs 41,000 crore. Nevertheless, the stock has languished, with near flat returns in the last five years.

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