PE funds put $500 million into two UPL units

KKR & Co, Brookfield and existing investors TPG and Abu Dhabi Investment Authority (ADIA) are investing $500 million in two wholly owned subsidiaries of UPL Ltd, an agrochemicals, seeds and crop protection company.

UPL announced Friday that KKR is investing ₹2,460 crore ($300 million) in Advanta Enterprises, which specialises in seeds technology, for a 13.33% stake, valuing the unit at ₹18,450 crore ($2.25 billion).

Abu Dhabi Investment Authority (ADIA), Brookfield and TPG will acquire a 9.09% stake in UPL SAS-India Agtech Platform for ₹1,580 crore ($200 million) at a total valuation of ₹17,380 crore ($2.1 billion). UPL-SAS includes the India crop protection business SWAL, Adarsh Farm Services and the Nurture digital platform. With this, the valuation of both subsidiaries will exceed $4 billion. The current market capitalisation of parent UPL is ₹53,471.72 crore ($6.46 billion).


ET was the first to report the deals online on October 20. The decisions were finalised during UPL's board meeting on Thursday evening.

Reducing Net Debt Levels
After a 6% jump on Thursday, the UPL stock dropped 2% at the close on Friday at Rs 699.85.

"Since the acquisition of Advanta in 2006, UPL has built Advanta into a leading global seed company with presence in more than 80 countries," UPL CEO Jai Shroff said in a statement. "We are working closely with KKR to build on Advanta's strong platform to deliver continued success in this next phase of evolution."

The capital raising will help unlock value in the subsidiaries, create scaled platforms, simplify structures and capitalise them besides reducing net debt levels. In 2018, UPL acquired Arysta Life Sciences for $4.2 billion and broke into the top five agrochemical companies in the world, joining giants like Bayer Life Sciences, Syngenta, Dow AgroScience, BASF and FMC.

TPG and ADIA had part funded the acquisition with a $1.2 billion infusion in UPL for a stake of about 22% in the company that houses all the international operations and was used as the vehicle for the purchase. An increase in net debt in the June quarter to Rs 26,500 crore, mainly due to working capital requirements, had made several analysts nervous.