Good evening everybody for joining the call on such a short notice. My name is Amit Dixit and I'm with Black Stone and I'm here with Ashok Goyal, Chairman and Managing Director of SL ProPak on this call. I will introduce the transaction and then I'll pass it on to Ashok and after that we can have some Q and A. So as you may have seen in the press release, Blackstone is committing up to $460,000,000 to acquire a majority stake in SL ProPak. This is a publicly listed company, which is owned 57% by the Ashok Goyal Trust.
So we are acquiring 51% at INR 134 per share. Ashok will be retaining the 6% stake and then we'll be making a mandatory open offer at INR 139.20 or INR 19 is the exact amount at which we're making the mandatory open offer. So overall, the transaction amount comes to about INR 3,211 crores or about $462,000,000 In terms of why are we doing why is Blackstone doing this transaction, I think I have 5 key messages. Number 1, SL Pro Pack is a global leader in flexible tube packaging and is a very high quality business. It's the world's largest manufacturer of laminated tubes.
These are the tubes which we use in your toothpaste. So if you use a Colgate toothpaste or a Patanjali toothpaste or let's say you use Fair and Lovely Cream, whatever you use, the packaging around it is made by Essel and it's the world leader in this market. It's a global company. It has manufacturing plants in 10 countries, 20 state of the art manufacturing facilities and long standing global customers, some of them for over multiple decades. And who's who of global consumer companies and pharmaceutical companies is a customer of SL ProPak.
Also SL ProPak is vertically integrated. So it also makes its own laminates. That's why it has a very strong competitive position in the industry. So I think that's point number 1, the core global leadership position for many decades of SL ProPak. Point number 2 is that there are strong tailwinds in the laminated tubes market and the consumption in emerging markets.
So what's happening in the market is laminated tubes are taking large share away from extruded plastic and aluminum tubes. So more and more you will see and you all know from using your own creams or any other pharmaceutical products you have or toothpaste that how everything is becoming more flexible, although it has a plastic laminated tube inside. So there's a very broad shift happening across categories. So we believe SL will be a big beneficiary of that in 2 areas. The growth will come from newer end markets, which is beauty, cosmetics, pharmaceuticals and the growth in emerging markets which is India, China, South Asia, Latin America.
So emerging market consumption growth for consumer growth is very high and SL will benefit from that and in addition the move to the newer segments. So that's the point number 2. Point number 3 or our message is we believe a partnership between Blackstone and SL ProPak can unlock significant value because Blackstone is very familiar with this sector. We have made multiple investments over the last 2 decades globally. In this sector, we have very strong conviction in this sector and the consumer sector overall.
As you know in India we have a consumer packaging company called SHK Car. In China we have a similar plastic packaging company called Shasten Packaging. We have very experienced people like Harish Panwani who is the former Chairman of Hindustan Unilever also the Chief Operating Officer of Unilever globally. He is a senior operating partner for Blackstone and available to provide his network and his expertise to companies in India, especially companies in the consumer sector. So that's point number 3.
Point number 4 is the core tenant of our investment thesis is continuity. So we are backing continuity because I talked about growth, what excites us, but what's equally important is the continuity and stability. That's why we are very happy that Ashok will remain as a shareholder. The management team will continue to take this company going forward and we can add the management capabilities with Blackstone's capabilities to take the company to the next level. And my last point is a little bit just about Blackstone.
That's my last message is, as you know, Blackstone has committed now $10,500,000,000 in India, roughly half and half in private equity and real estate. We are the largest owner of commercial real estate in India and part of that portfolio went public on April 1st through the REIT platform. In private equity, we are large investors in many companies. We executed India's largest buyout which was emphasis in 2016. So the point is we have made a very strong commitment to India over the last decade.
And as you heard from Blackstone's leadership, both Steve Schwarzman and John Gray were in India in the last 6 months that India continues to be a focused market for Blackstone and a well performing market for Blackstone and we'll continue to make sizable investments like you have seen we are committing close to $500,000,000 to SL ProPak and you saw in February we again committed close to $500,000,000 to Aadhaar which was an affordable housing finance company. So just in private equity in the first 4 or 5 months of this year, we've committed close to $1,000,000,000 to sizable transactions in the country. So with that, I will just stop here and I will pass the microphone to Ashok Goyal.
Thank you so much, Amit. Ladies and gentlemen, greatly appreciate you joining the call. And a bit of preempting some of the questions you might have is that I had been looking for Accel Pro Pac and the position that Accel Pro Pac has Amit explained very well, a global leader. As the Managing Director of the company, I have always been looking at the succession, the continuity of the business and not just the continuity, but even the growth of the company. And that's the kind of partner that I was looking at.
What I we take pride in is that Esselpro Pac is very well governed company. And that is not just a regulatory requirement, but also a business requirement because for us to deal with global customers, we had to be absolutely above board and not just in internally, but also in our actions. So therefore, we were looking for a suitable partner. And I'm delighted that we found Blackstone as that partner who can continue the legacy, can can maintain continuity of the management and the customer relationships and stakeholder relationships, of course, that will catapult the growth of the company even further, creating even better value for the stakeholders. So with that, I leave the floor open for question and answer.
Sure, sir. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Please note that this call is for media only and questions will be taken from media. There will be a separate investor call that will be happening.
The first question is from the line of Nishtha from CNBC. Please go ahead.
Hi, thanks for taking my question. And first, this transaction And of course, this transaction had been on and had been under deliberation for a long time. But my one question to Mr. Goyal. Mr.
Boyle, what was the prime reason for this transaction? And you have agreed upon a price that is lower than the open offer price. What was the reason for that?
Yes. Hi, Anisha. Thanks for your question. So let me take the later part of your question first. That INR 134 that I'm getting and INR 139.19 is the open offer.
That is as per so I did not want to take any penny more than what my minority shareholders would have received. So there is another element that I will get about INR 16 crores per year for 5 years as an advisor to the company and to Blackstone. And that amount is part of the open offer. And therefore, you see a difference because I'm getting INR 80 crores by way of a transition service agreement.
Okay. And this is just as an advisory fee that you will be getting. It's not non compete or anything else in nature.
The transition service, that includes advisory and everything. Competition is not part of it. And so whatever I'm getting, I will get over a period of 5 years, whereas the minority shareholders will get it up
All right. And management continuously, so who all would be sitting around with the company at the moment, if you can share a little more detail on that?
All of the senior management stays, and that's what also enshrined in the word continuity, is that Ram Ramasamy, who is the Chief Operating Officer, And all of the leadership team we have at the corporate and also in the region stays intact.
All right. And my question to Amit would be why packaging company, which is SL Propag and not others which were also offered for sale and some of the other private equity players had bought recently? What differentiates this company from the others?
I think one big differentiator for this company is that this is a global company. More than 62 thirds of the revenue of the company is outside of India and is denominated in U. S. Dollars or euros of foreign currency. So this is not a local packaging company which is providing packaging for FMCG companies in India.
This is supplying to companies in U. S, Europe, India, China, Mexico, Colombia. So it's a very global platform which requires a very different capability both in R and D, product innovation and importantly management because the management itself to such a large global customer base has very different attributes than management which sells to a largely local customer base. So I think that's a very big distinction between Accel Pro Pac and some of the other companies. That's point number 1.
Point number 2, as Shok mentioned, I think the corporate governance of this company and the way the diligence on SL Pro Pack and everything check out. And we did many customer calls yesterday and you should you could have heard them on how well the customers regard the company, which was very refreshing. And the last point I would make on a differentiation is, which is what we are focusing on, is this is a combination of stability and growth because the Oral Care segment provides a very because the company is the world's number one company in Oral Care for laminated packaging. It has a 40% global market share. However, it's very fast growing in beauty cosmetics and pharmaceuticals.
So what we really like here is you have the stability of a leadership position in a segment and you have a growth vector in a new segment, which is aided by the company's sort of global footprint and you are seeing emerging markets growing much faster than the developed markets. So I think all those reasons, in our view, differentiate
Right. And one more question on whether you're going to use this platform to increase your bandwidth in the similar sector because it's present in many other countries as well as it's global in nature. So will it be used as a platform in India or elsewhere?
Absolutely, Nisha. I think that always is our approach. We always are constrained not by capital, but by platform and management talent. So if there are relevant sort of opportunities globally or in India in the right in our strategic focus areas where we are going to focus on emerging markets and newer segments, if those opportunities help us accelerate the plans, we will definitely evaluate that.
All right. Any growth projection, Amit?
As you know, this is a publicly listed company, so we can't we cannot make any sort of projections. But we are speaking we are putting our money where our mouth is. So All right.
I'm hoping to meet you separately on an interaction as well. Thanks so much.
Thank you. The next question is from the line of Jagdish Ar from BC Circle. Please go ahead.
Hi, Mr. Amal. This is a question for you. And any kind of a fresh capital infusion also is expected for the company post your acquisition?
Hi, Jagdisha. This is not the current plan. I think the current plan is to make this investment. And as I answered in the previous question, if there are right opportunities, let's say, if you have to fund an R and D project for a customer program or there is an acquisition opportunity, then we will infuse further capital.
Also, you mentioned that globally, you have a similar portfolio companies in across geographies, considering Airtel, ProPack is also a global has a global market that way. How do you create an alignment with your portfolio companies in other geographies? Like
this? I think the alignment is more from the customer angle not with the other companies because we have very deep relationships with all global consumer companies whether it's Unilever or Colgate or P&G or L'Oreal or GSK, whichever one you pick, Blackstone has deep connects and we think some of those relationships can be quite helpful to SL Pro back. I think that's the primary angle. But in this space of flexible plastic manufacturing with laminated tubes, ethylproPack will be Blackstone's only investment globally. This is the horse we are backing and we'll put all our eggs behind this basket.
Thank you. The next question is from the line of Ranju Sarkar from Business Standard. Please go ahead.
Hello, Mr. Goyal. This is for you. So, Goyal, can you give us a sense of what will this Well, I'm not very clear
about Well, I'm not very clear about the question simply because I have no debt. I'm not leveraged. And therefore, I don't know what does that mean.
No. What I wanted to ask you is that would the proceeds of the transaction, would it be used to kind of reduce the debt for the group companies?
Well, Mr. Sarkar, and SL ProPak, Ashok Well Trust is not financially, commercially part of the Essel group that you're referring to.
Okay. Okay.
Amit, my question is for you. Can you give us a sense of you talked about how you have invested about €10,500,000,000 in India. Could you give us a sense of how India has done for you in terms of returns and exits? How much of the money you've returned to your investors?
Yes. So, Rantu, it's been we cannot explicitly due to compliance talk about sort of returns. But overall, I think I can repeat what our President and Chief Operating Officer, John Gray, when he was here, he said he made a public statement that Blackstone Private Equity is the best performing country for Blackstone globally. That's what the statement he made. So things have been quite good and you may have seen some of our exits recently where last year we were able to sell Intelenet to Teleperformance, which is a business process outsourcing company.
Before that, we were able to sell our transporting and airways. Before that, we did our company, Asia Electric, which we sold to Isarashi Motors. We sold Sonalika tractors to Yanmar. So it's been multiple company after others that we have exited over the last 2 or 3 years. So as we have long story short, it's been a very good run.
And on the $10,500,000,000 you saw a very large monetization platform getting created on the Blackstone REIT. So I just talked about the private equity side. On the real estate side, we took a massive vehicle, India's largest REIT and the India Sports Street to the market where Blackstone is the largest shareholder and that's already public in the public domain. So it's been so long story short, it's been a good run both in terms of investments and profitable exits. Right.
In the last 2, 3 years, we have seen several VC private equity firms betting on consumer plays. Do you see this as an extension of the same? Or is it more of a related consumer play?
Yes. What we call Ranju, what we call this theme is B2B2C. In other words, let's say a company like Hindustan Unilever is a B2C company because their products are consumed by all of us. A B2B2C company is a supplier to Hindustan Unilever. So we have followed this theme of B2B2C globally and we really like this theme.
Several years back, we had invested in packaged cake, which also surprised 2 FMCG companies that it provides fragrance and flavors.
So
again, every deodorant or shampoo or agarbatti will have fragrance in it. So we like the B2B2C theme because it's never to be same domestic end consumption, number 1. And number 2, you are actually dealing your customer is another business. You're not dealing with consumers. And in the case of SL Pro Pac, these are the world's best companies.
These are Fortune 500 companies' household names. And so your customer contracts are denominated in foreign currency with the world's best customers. So you have the stability from that. Like some of the customers with SL Pro Pack have been with the company for over 20 years. One customer has been with the company for over 30 years.
So B2B provides stability, the P2C provides growth. So we like the theme of B2B2C.
Right. Thank you so much Amit. Hope to catch up with you offline sometime.
Sure. Thanks.
Thank you. The next question is from the line of Pavit Nair from Financial Express. Please go ahead.
Hi, Mr. Dikshit. This is Pavit Nayar from the Financial Express. Hi, Pavit. Hi.
And congratulations to you, sir, on this deal. One question to you is I read in one of the reports that a French major and an Indonesian major were also vying for the state, but Blackstone came in as a winner. Would you like to tell us something more about some of the final bids and how Blackstone kind of emerges the final play for
us? I will Bhavik, I will let probably best not to go into the details of the process, but maybe Ashok can comment on why he chose Blackstone.
Well, Bharat, I obviously can't talk about other names. As I mentioned in my opening remarks, that we really look for somebody who where the minds meet met and the ethos and the culture and the values that one would strengthen the existing ethos and values and culture of Hessel Pro Pack. And we found that completely matching with each other. And that was one of the major factor of the Blackstone Emerging Company.
Also, Mr. Betschida, I would like to ask you, when did the deal talks commence with SL2 packs?
I think it's been we've been in discussion for a few months. So and that's I think has been in the public domain.
Okay. And any more plans? I heard you said that you'll only pull a capital inflation further in case you would be going from acquisitions. So do you see that there's a potential to do an acquisition in this particular sector in this country going ahead?
Absolutely. I think it's not just this country, but outside also. So I think this is actually one of the reasons why I think it's a good partnership between Blackstone and SL ProPak because we have a very large global network because Blackstone is present in all countries globally and we think there could be synergistic opportunities in those countries which we can evaluate for an acquisition.
The next question is from the line of Nishu from CNBC. Please go ahead.
Just one clarity that I require just to go from you. You categorically mentioned that you have no debt and your trust has no debt, and you are not part of the SL Group that you're referring to, which is leveraged. Just one understanding, SL Infra is also like a group company, which is not in the listed space. Would you have any equity in that or any presence in that? And could some of this money be used for deleveraging that company at all, if you can give that clarity?
Yes, Alicia, I guess I've already gone public with this comment. We as a I mean, if you talk as a family, yes, we are one single family. We are a strong family, and we care about each other. But there is no financial or commercial relationship with each other, and there's no cross holding whatsoever. And therefore, I'm not sure how to respond to this question at all.
All right. Thanks for your clarity. Thanks.
Thank you. Next question is from the line of Ranjos Sarkar from Business Standard. Please go ahead.
Amit, if I may ask you, in terms of all the deals that you have done till date, especially in the consumer space or so, where would you put this particular deal? And if I may also ask, going forward, what is the kind of overall focus for
you? Sure, sure. The to answer your first question, the size of the deal speaks for itself.
Right.
This is the largest commitment we have made in the consumer sector in India, dollars 500,000 close to it, what we are committing. So that speaks to our excitement about the company, which we have. And in terms of our focus areas, our investment strategy is focused on 5 sectors. So consumer is one of them. And in addition to SL Pro Pac, we made an investment in Transmoldavian Airways, which is also a B2B2C company, SH Kalkar, a B2B2C company.
We are 2nd sector for us is financial services, where Aadhaar is an investment we have made recently. IT, information technology is our biggest sector where we have investments in Mphasis, in DASKUS, in IDS Software, until very recently, in Telenet. The 4th sector for us is auto components where we used to own Agile Electric and now currently we have a platform called Comstar, which we are using that as a buy and win platform. And through Comstar, we have already merged it with another company to create a larger auto component platform. And the last sector for us, number 5, is healthcare, where we used to own or be an investor in NQR Pharmaceuticals.
But currently, we don't have a company in our portfolio in that sector. So I think these are the 5 sectors we focus on. And there is a new theme which is going on in India where we are putting a lot of resources into which is distressed because as you hear a lot of non performing loans, a lot of distress in the corporate sector in India. So through our tactical opportunities fund, we have taken a controlling stake in IARC, which is an asset restructuring company. And through that, the strategy is to buy underperforming loans and we have committed about $200,000,000 to that project.
So anyway, so that's our focus areas in our investment strategy.
Now you have invested in some other companies like SH Kalka. Do you see some clear synergies between them or in terms of their customers, common customers and others?
I would say it's more not direct expertise between 2 suppliers, but more understanding of the business and the dynamics around it and what's required to succeed. I think that's the core commonality. Not necessarily that customer A will become you do cross sell or not. That is very opportunistic, may or may not happen. But the more is the our understanding of the sector from 360 degrees, customer and supplier, raw material management, that's what's helpful.
Okay.
Amit, you mentioned that India has been one of your best performing markets. Have allocations to India increased because of that?
I think so. I don't think we'll be getting 2 commitments in 3 months for $500,000,000 fee if we didn't have the performance to show for it.
Right. Thank you. Thank you so much.
Thank you. The next question is from the line of Shiram from Mint Newspaper. Please go
ahead. Yes. Hi. My question was for Ashok. I wanted to ask why haven't you sold your entire stake?
And if you plan to sell it, is there a time line for that?
Hi, Shriram. Obviously, I wanted to partner with Blackstone, and that's what drove the decision to propel the entire stake and hopefully create better value for the future.
And anything on sort of a time line if you want to dilute your stake further? Now you're on an adviser for 5 years. Beyond that any
Well, there's no restriction from Blackstone's point of view, except that I can't be part of the open offer. But I've not thought about it that long, Seiram, to be absolutely honest. Right. Perfect. Thank you.
Thank you.
The next question is from the line of Madhav Chinchani from Times of India.
My question is for Mr. Goyal. Mr.
Goyal, I wanted to understand, I mean, what do you plan to do with this capital? Because I understand you also sold ItsCash a few years ago. So just wanted a bit more clarity. I mean, are you trying to start something, some new business? Or
what's the idea?
Well, Madhu, my because of my life is taken as it comes. So obviously, I have no plan that I made any specific that I will strengthen the business of Essilworld and through SL World whatever the other leisure assets that we intend to build. So the investments will go in that. And obviously, I will do some philanthropic work, which has been very close to my heart. That I will allocate resources for that.
On that I will say so.
Okay. Okay. Thank you.
Thank you. As there are no further questions, I now hand the conference over to the management for their closing comments.
Well, thank you everybody for listening to the call and for all your all the Q and A. I think the questions asked were very thoughtful. So really appreciate that. And I hope you felt that the answers were the same. And just to summarize, I think the key takeaways from this call are that Blackstone is committing $460,000,000 to acquire a majority stake in Accel Pro Pac.
Continuity is an important team where we are entering into a partnership with Ashok Goyal and the management team to take the company to the next level. And the reason we are in this company is that this is the number one company in the entire world in laminated tubes with global marquee customers with a very broad manufacturing footprint. And we think jointly we can take this company in a growth mode in 2 areas. 1 is the fast growing end segments like beauty, cosmetics, pharmaceuticals and second fast growing geographies like India, China, Latin America, the emerging markets. So we are very excited about this partnership and looking forward to working with the company and Ashok going forward.
Thank you, Amit. Same here. I'm delighted to be partnering with Black Stone today. And that's with the belief that we will strengthen our service levels and deliveries to our customers and build stakeholders' value together. Thank you very much.
Thank you.