Subhash Chandra-promoted Essel Group is in talks with investors to raise as much as $400 million in a structured credit transaction, two people directly aware of the development said, requesting anonymity. The group will raise funds to refinance a part of the promoter debt which will mature over the next few quarters, they added.
“Discussions are currently underway with potential lenders, including AION Capital and KKR,” said the first person. “The funds will be used to refinance debt of the group’s Mauritius holding company, which has investments across multiple businesses.”
Structured credit transactions typically offer flexible repayment terms compared with bank loans and are often tapped into by borrowers to tide over short-term cash flow issues, which do not allow them to service bank debt at periodic intervals.
In a similar transaction in November, India Resurgence Fund, a joint venture between Piramal Enterprises Ltd and Bain Capital Credit, had invested $156 million in the marine chemicals business of Chennai-based Archean Group. The money was used by the company to repay existing lenders, including banks and KKR.
“Essel has begun talks with the investors after an earlier plan to raise funds through overseas bonds did not take off due to difficult market conditions,” the first person added.
KKR and AION declined to comment. Queries sent to Essel Group remained unanswered.
In July 2017, Mint reported that Essel promoters were looking to raise up to $1 billion in the group’s Mauritius entity, which had a debt of $800 million. The purpose of the fundraise then was to refinance the entire debt of the Mauritius entity.
Essel Group was founded in 1926 by Jagannath Goenka and has business interests in media, packaging and infrastructure. It has been looking to deleverage by selling stakes in various group businesses for a while.
Last November, the group had announced a 50% stake sale in its media business arm Zee Entertainment Enterprises Ltd to a global strategic partner. It had said then that the move would help it maximize long-term value, and transform it into a global media-tech player with content offering for audiences across 170 countries.
The Essel Group had appointed Goldman Sachs Securities (India) Ltd as investment banker and Lion Tree as an international strategic adviser to manage the Zee divestment. It expects the strategic review to be concluded by March-April.
In September, Mint that the group had begun talks with potential buyers, including strategic players and private equity funds, to sell a controlling stake in Essel Propack Ltd, which is led by Ashok Goel, the younger brother of Essel group founder Subhash Chandra. Essel Propack is the largest specialty packaging manufacturer of laminated plastic tubes, catering to the fast-moving consumer goods and pharma sectors.
In November, Mint reported that private equity investor Actis LLP was in advanced talks to buy Essel Infraprojects Ltd’s solar power projects for ₹5,500-6,000 crore.