KKR enters into agreement with JBF Group to invest $ 150mn

Kohlberg Kravis & Roberts (KKR), one of the global investment firm in the world, has signed a definitive agreement to invest $150 million (Rs 962 crore) into JBF Group a Mumbai-based polyester maker and its overseas arm. A portion of the proceeds will be used by KKR to acquire 20 percent stake in JBF Industries and will also invest in zero-coupon compulsorily convertible preference shares with 14.5 per cent voting rights in its Singapore-based wholly owned subsidiary JBF Global Pte Ltd.

Of the total, KKR will invest Rs 491 crore to buy the stake in the listed firm at Rs 290 a share through a preferential allotment. The balance will be invested to buy 12.2 million convertible preference shares of JBF Global.

JBF Industries was founded in 1982 by Arya as a yarn texturing company and went public in 1986. It manufactures polyester products ranging from polyester chips, polyester yarn and films which are used in fast-moving consumer goods, textile and packaging industries. The company has six manufacturing facilities across India, Bahrain, Belgium and the United Arab Emirates.

JBF, which is among the top-10 producers of polyethylene terephthalate (PET) chips and of BOPET films globally, operates three domestic facilities – one in Gujarat and two in Silvassa. JBF Group’s products include PET chips which are of bottle grade, textile grade and film grade; polyester yarn, such as partially oriented yarn (POY), polyester filament yarn (PFY), full drawn yarn (FDY) and other specialised yarn; and PET films, which are of thin grade, thick grade and metallised grade.

In addition, JBF is setting up a purified terephthalic acid (PTA) plant in Mangalore SEZ having 1.25 million metric tonne per annum capacity, which it claims to be among the largest in India.

Bhagirath Arya, founder and executive chairman of JBF said that the funding provided by KKR will help JBF complete their ongoing projects. KKR’s support will better enable JBF to grow its international presence and support the Make in India campaign.

This type of investment into a world-class company such as JBF is a great example of how KKR can support Indian manufacturing companies providing value to global customers, Sanjay Nayar, member and CEO of KKR India, said.

KKR, which specialises in leveraged buyouts globally, will primarily make its investment from the KKR Special Situations Fund II. This is the first investment in India from this new fund. This is also its biggest new investment in India after it bet around $200 million in Gland Pharma a little over a year ago.

This is the second time JBF has inked a PE deal with a similar structuring. In 2005, it had roped in Citigroup Venture Capital International (CVCI) as a shareholder and two years later CVCI committed additional money to the Singapore-based holding arm of its international operations. CVCI, now owned by The Rohatyn Group, had exited JBF in 2010-11. It sold shares in both JBF and the Singapore arm, making a profitable exit in the process.