Japan’s Nippon Paper Industries Co. Ltd is entering the Indian market by acquiring the largest local paper cup manufacturing company owned by the BK Modi Group for an undisclosed amount.
Nippon Paper said it will acquire BK Modi Group’s privately held firm Plus Paper Foodpac Pvt. Ltd, which counts Kentucky Fried Chicken and other leading multinational fast-food chains among its customers. The agreement was signed last month. Plus Paper operates two factories in India.
This will be a part of Nippon Paper’s overseas expansion initiative for the paper container processing business following its recent move in Vietnam. In Vietnam, Nippon Paper has taken ownership of the manufacturing and marketing operations of local paper cup market leader Viet Hoa My Service Trading Production. The Japanese firm picked 65% stake in the JV with the Vietnamese firm and the venture began operating this month.
These acquisitions would give Nippon Paper its first manufacturing and marketing base in the subcontinent.
Nippon Paper expects demand for paper cups by Indian restaurants to grow along with an expanding middle class. India's fast-food market will rise by an estimated 50% from 2015 to $25.7 billion in 2020, according to British market survey company Euromonitor International.
As per its medium-term business plan (from FY2014-15 to FY2016-17), Nippon Paper has been going through a business restructuring, reallocating resources where future growth is anticipated, the firm said. In Asia, the paper and paperboard container market, particularly for food and beverages, is expected to see sound growth along with the expansion of personal consumption, it said.
Indian Law Partners (ILP) acted as legal adviser to Nippon Paper while PDS Legal acted as legal adviser to Plus Paper’s promoters. Japanese Law Firm, Mori Hamada & Matsumoto through its India practice partner Yohei Koyama, advised Nippon Paper with respect to Japan-related aspects of the transaction.
Anchor Advisors, Tokyo, through its partner, Siddharth Bhaiya acted as financial adviser to Nippon Paper while Ernst & Young acted as financial adviser to Plus Paper’s promoters, BK Modi Group.
BK Modi Group
On Monday, Hotspot, the mobile retail chain of handset manufacturer Spice Mobility Ltd, also part of BK Modi Group, said it is in an advanced stage of discussions to buy out the Indian business of Jumbo Electronics, Dubai’s largest consumer electronics retailer.
Spice Mobility is part of the $2 billion Spice Global Group which is promoted by India-born BK Modi, who is a citizen of Singapore. The group has diversified interest in telecom, real estate, retail and BPO.
The public-listed Spice Mobility was involved in several acquisition deals in the recent past. In July 2015, a unit of BK Modi-promoted Spice Mobility had acquired a minority stake in Creative Functionapps Lab Pvt. Ltd, which develops products and services for next-generation telecom networks.
Prior to that, Spice Digital Ltd (SDL), a subsidiary of Spice Mobility Ltd, had acquired 38.53% stake in privately held Anytime Learning Pvt. Ltd, which provides online higher education services.
Paper Deals
Among the deals in this space, Avantha Group firm Ballarpur Industries Ltd (Bilt), the country's largest paper company, received a preliminary interest from Singhania Group's JK Paper Ltd to buy two out of its five paper plants in the country. However, a previous report by Mint said that Avantha Group is likely to reject rival JK Paper’s offer to buy two paper factories in Maharashtra run by group company BILT Graphic Paper Products Ltd (BGPPL) because of a valuation mismatch.
In July last year, Bilt said it is planning to divest its entire 98.08% stake in the Malaysia-based step-down subsidiary Sabah Forest Industries Sdn, for an undisclosed amount.
In July 2016, Finnish packaging company Huhtamaki Oyj acquired a 51% stake in Valpack Solutions Pvt. Ltd, a privately held paper cup manufacturer based in Mumbai, for a debt-free price of about €2 million ($2.2 million).
The acquisition helped Huhtamaki enter the growing food service packaging market in India, where it already has many customers.
In February 2016, Ratan Tata invested an undisclosed amount in Hyderabad-based disposable paper cup and packaging material maker Bollant Industries Ltd.
The deal marked a rare non-tech investment by the former chief and currently chairman emeritus of Tata Group's holding firm Tata Sons.
Like this report? Sign up for our daily newsletter to get our top reports.
