Brookfield takes minority stake in JFPL packaging films biz for Rs 2,000 cr

The brookfield buying minority stake in JFPL will result in JPFL carving out its packaging films business, which generates approximately 85% of its total revenue, into a wholly owned subsidiary

Jindal Poly Films Limited (JFPL) announced on Thursday that it has signed an agreement for the sale of a minority stake in its packaging films business to Brookfield Asset Management in a Rs 2,000 crore deal.

The transaction will result in JPFL carving out its packaging films business, which generates approximately 85 per cent of its total revenue, into a wholly-owned subsidiary in which BSI will hold a minority stake. JPFL will continue to own its non-woven business unit and other corporate assets.

The structured equity investment in JPFL consists of compulsory convertible preference shares and equity shares of the new subsidiary, giving BSI a 25 per cent stake and downside protection through a ratcheted equity structure tied to financial performance. BSI has also entered into an investor rights agreement.

"We are proud to enter a strategic partnership with a large global investor such as Brookfield. Having access to their international network greatly broadens our horizons. The transaction is a testament to JPFL's leadership position and growth potential," stated Vinod Kumar Gupta, Chief CEO, JPFL.

"Brookfield's presence on the board of this new subsidiary will also facilitate benchmarking to international governance standards and best practices,” he added.

"We are pleased to partner with JPFL, India's leading manufacturer of flexible plastic films for the packaging industry, which plays an essential role in the preservation and hygiene of products in different sectors such as food and healthcare. In partnership with Jindal, we aim to help the company maintain its strong track record of growth," commented Dev Santani, MD, BSI, a special investment programme of Brookfield.

"BSI is sector agnostic and invests in large-scale, non-control (minority) investments where we can provide capital and be a strategic partner to leading companies. We intend to continue to scale our BSI investments in India and be a partner of choice," added Santani.

The transaction is subject to customary approvals and is expected to close during the first half of fiscal year 2023. Investment bank Rothschild is the sell side investor for the transaction.