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Race for Shapoorji Pallonji Group-owned Eureka Forbes: PE firm Advent International in the lead

Eureka Forbes is a subsidiary of listed parent Forbes & Company and the 150-year-old Shapoorji Pallonji group is keen to take advantage of the health, hygiene, and home improvement wave post-COVID-19, unlock value and reduce its debt through the proposed transaction.

September 09, 2021 / 07:26 PM IST
Image: Reuters

Image: Reuters

Private equity major Advent International has emerged as the lead suitor to acquire Eureka Forbes, the consumer durable flagship of the diversified conglomerate, Shapoorji Pallonji Group and a household name in the vacuum cleaner and water purifier segments, industry sources with knowledge of the matter told Moneycontrol.

On June 28th, 2021, Moneycontrol had reported that three bidders, namely Advent International, Warburg Pincus, and Swedish home appliance maker Electrolux had been shortlisted for the sale process of Eureka Forbes.

Moneycontrol was also the first to report the sale plans of the SP Group on 20th November 2019.

Eureka Forbes is a subsidiary of listed parent Forbes & Company and the 150-year-old Shapoorji Pallonji group is keen to take advantage of the health, hygiene, and home improvement wave post-Covid-19, unlock value and reduce its debt through the proposed transaction. An internal restructuring exercise, involving a demerger of Eureka Forbes from Forbes & Company is also being pursued to facilitate the deal, the sources above added.

“Advent International is currently the front runner for the buyout of Eureka Forbes and is the best-positioned bidder. It has made good returns from Crompton Greaves and remains bullish on the consumer sector,” said one of the persons cited above.

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A second person told Moneycontrol, “ Eureka Forbes is a good business with a strong brand and the firm has been on the revival path in the past few years. It can be scaled up by a private equity firm like Advent which has had previous exposure in the consumer sector.”

According to its website, Advent’s consumer portfolio in India includes DFM Foods, men’s innerwear brand Dixcy Textiles and Crompton Greaves Consumer Electricals.

A third person also told Moneycontrol that Advent International was the front-runner for the deal and added that the valuation was likely to be around Rs 4,500 to Rs 5,000 crore.

According to a fourth person, Advent has the right structure in place in India to be in a position to bid aggressively and it is also known to hire the best industry talent to manage their portfolio firms. This person elaborated that Standard Chartered Bank had been mandated by the SP Group to find a buyer.

All the four persons above spoke to Moneycontrol on the condition of anonymity.

In response to an email query from Moneycontrol, Advent International and Standard Chartered declined to comment. Moneycontrol is awaiting an email response from SP Group and Eureka Forbes and will update this article as soon as we hear from them.

Back in November 2019, Forbes and Company had made the following disclosure to the stock exchanges: “The Company has been frequently queried by various stakeholders including by shareholders of the Company regarding future plans relating to unlocking the value of Eureka Forbes Limited. Currently, Eureka Forbes Limited is a 100% subsidiary of the Company.

The Board of Directors of the Company has authorised the management of the company to evaluate a scheme of arrangement and/or other appropriate mechanisms to enable an eventual listing of Eureka Forbes Limited, with an intention to unlock value in the hands of all the shareholders of the Company. These may also include listing, dilution/sale or combination thereof of Eureka Forbes Limited.”

A CLOSER LOOK AT THE TARGET EUREKA FORBES

The popular Aquaguard range, extensive pan India distribution network, and after-sales service are some of the key factors which are believed to make Eureka Forbes an attractive target. The firm is also present in segments such as purifiers, security solutions and accessories and had recently launched Forbes Coronaguard, a virus disinfectant device as well as robotic vacuum cleaners.

Interestingly, Eureka Forbes was set up in 1982 as a joint venture between Forbes & Co & Electrolux, one of the suitors in the race for the deal. Post the sale of Forbes & Co to the SP Group in 2001, the latter purchased the 40 per cent stake of Electrolux in the joint venture. According to reports, Electrolux had exited back then as it had already got out of the direct marketing business globally.

As per its website, Eureka Forbes has Asia's largest direct sales task force, a base of 20 million customers, and a reach of over 450 cities and towns in India with a global footprint in 53 countries. The firm has a consumer channel of over 18,000 dealers, and institutional channel Forbes Pro Solutions that has water projects, cleaning solutions, and railways divisions as well as an inventive business partner network and a rural channel.

It has extended its presence overseas via a joint venture with Lux International, Switzerland, the website says. Other than Aquaguard, the firm has other brands like AquaSure, Euroclean, Euro-Air, Eurovigil, Fireguard, and Eurodiya (solar bulbs).

According to reports, Eureka Forbes posted revenues of Rs 2,388 crores in fiscal 2019. It has manufacturing units at three locations -- Bengaluru, Dehradun, and Baddi -- with a manufacturing capacity of around 12 to 15 lakh units per annum.
Ashwin Mohan
first published: Sep 9, 2021 07:24 pm

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