InvestorQ : Why is the Shapoorji group looking to sell Eureka Forbes?
Mitali Bhutta made post

Why is the Shapoorji group looking to sell Eureka Forbes?

2 years ago

Shapoorji Pallonji Group has commenced the sale process of home hygiene products maker Eureka Forbes all over again to arrange funds to keep the group operations running in the midst of troubled times. The group has gone deeper into financial crisis after the Supreme Court denied them the right to pledge shares of Tata Sons, being a private company.

SP group has already begun talks with potential buyers, which includes some very prominent PE funds apart from companies with business interest in the field of consumer appliances. The company has not made any official statement. Eureka Forbes is popular for its vacuum cleaners and water purifiers.

SP Group is also currently evaluating other structures to monetize the assets of Eureka Forbes without divesting ownership. To that extent, the SP group is also currently engaged with a large Canadian PE fund to raise debt by pledging the future potential cash flows of Eureka Forbes as collateral for the loan. That is under discussion at this point of time.

SP Group was also supposed to pledge part of its stake in Tata Sons to the Canadian Fund but that is on hold right now till there is a final verdict on pledge issue by the Supreme Court. Apparently, SP Group is seeking an enterprise valuation of around Rs.7,000 crore for Eureka Forbes, which has an annual sales revenue of Rs.3,000 crore.

Funds are a priority for the SP group as it had missed a critical deadline to repay dues to group company Sterling and Wilson Solar raising serious doubts about the group’s financial viability and its ability to service its debt. The parent group had only repaid 10% of the dues to the Sterling and Wilson Solar.

Shapoorji Pallonji group has already offered to swap its stake in Tata Sons for shares in publicly traded Tata group firms. As of now the deal is not accepted by the Tata Group and that could hold the key to the future of the SP Group.