Brookfield, GIC of Singapore, the country’s sovereign wealth fund and Alpha Wave are circling around PGP Glass Pvt Ltd (formerly called Piramal Glass) for a minimum 50% stake along with joint control as Blackstone the current owners of the company looks to part sell and unlock value from their 3 year old investment, said people familiar with the matter.
The buyout funds are competing with PAG and Apollo Global Management who are still believed to in the fray but not that aggressive as the top three. Alpha Wave — previously Falcon Edge Capital, has so far been a big backer of Indian start-ups like Lenskart, Off Business, Cred, DailyHunt, Cars 24, Dream 11 as well as global marque brands and ventures like Aman Resorts, Didi, Space X, Ant and Alibaba Group.
PGP primarily caters to Cosmetics & Perfumery (CP), Pharmaceuticals (PH), and specialty food packaging (SFB) industry including beverages and alcohol bottles. The company is leading supplier of glass bottles to the top cosmetic brands globally and derives over 45% of its revenues from CP industry. The company is also a market leader in manufacturing of Type I pharma glass with over 50% market share in the domestic market. Globally there are only 4 players manufacturing this type of glass. The company has 3 manufacturing facilities across India and Sri Lanka and marketing distribution arms in USA, UK, Dubai and Europe and exports to over 60 countries across the globe. PGP has long term relationships with consistent repeat orders from existing clients. However, there are no long term supply contracts in place. The top 10 customers have contributed about 14% of revenue in FY22. Its key clients range from Baralan International S.P.A., CIMSA, Baralan Glass, USA Coty, Unilever, LVMH, Estee Lauder.
Blackstone bought 100% of the company from Ajay Piramal for $1 billion in 2021 trumping Partners Group and has seen healthy growth ever since. Revenues have doubled since Blackstone takeover and margins improved. In FY24, revenues were Rs 4000 crore and EBITDA Rs 1162 crore ($140 million). Most bidders are looking at a valuation of 10-12 x FY24 EBITDA which translates to $1.4 bn – $1.68 billion. The company is debt of Rs 2075 crore (250 million). However Blackstone’s ask of $1.8-$2 billion may force many to baulk away from the trade.
When contacted Blackstone, Brookfield declined to comment. Mails sent to Apollo, GIC of Singapore, Alpha Wave and PAG did not generate a response.
Blackstone had mandated Jefferies to run a process which initially saw interests from several PE funds including CPPIB, Partners Group, Carlyle, Apax, Bain Capital among others. Bain said one of the sources was keen to buy out the entire 100% or at least a controlling stake but Blackstone is not keen on ceding control as yet.
However market observers feel, growth has been driven by price increase of around 20-25% in the last 2 years, largely because European competitors have suffered due to high fuel (gas) prices. However, maintained volume growth going ahead could be a challenge.” In Europe they have tried to break into the spirits and beverage segment and in US the cosmetics segment which has not been so easy. There are few natural buyers for this asset. Apollo made 5X on their investment in Verallia, but they were not as niche as PGP.
“The glass packaging industry is capital intensive in nature, requiring regular capex for relining / cold repair of the furnaces, capacity augmentation as well as for routine maintenance. On a consolidated basis, the company is expected to spend Rs.360 crores in FY23, Rs. 256 crores in FY24 and Rs. 420 crores in FY25 towards routine capex and capacity augmentation,” said Care Ratings in their December 2022 report.
Historically Blackstone has been a big investor in the packaging industry, having made 8X return in its European investment, Gerresheimer Glass in 4 years. In India, Blackstone also bought Essel Propack. Uwe Roehrhoff from Gerresheimer was to join and advising PGP Glass on the Board. Harish Manwani, former chief operating officer Unilever and a current advisor to Blackstone will also be managing the investment and assist the existing management led by Shah, a Piramal Group veteran. Unilever is also a key client of the company.
Incorporated in 1974, PGPL was acquired by the Piramal Group in 1984. In 1990, it was merged with Piramal Healthcare Ltd (PHL, formerly Nicholas Piramal India) and in 1998, the glass division was spun off into a subsidiary.
After restructuring operations, in July 2003, PHL divested its 54% holding in PGPL to a new subsidiary, Kojam Fininvest, which was subsequently listed. This was followed by the merger of Kojam Fininvest into PGPL and the merged entity was later relisted as Piramal Glass Ltd. It was delisted from the exchanges effective July 2014.
Source: Economic Times