PE funds eye stake in Sintex Plastics

BENGALURU: Sintex Industries Ltd, the world’s largest maker of plastic water tanks, is in talks with private equity funds to sell a minority stake in its demerged entity — Sintex Plastics Technology Ltd, according to two people aware of the development.

TPG, Blackstone Group LP and Carlyle Group have shown interest in the firm and separate talks are on to sell a minority stake worth $200 million (₹1,300 crore), said one of the two cited above, requesting anonymity.

In September, Sintex Industries’ board approved a plan to separate its non-textile business under Sintex Plastics and subsequently list the separated company on the BSE and the NSE later this year. In 2015-16, about 74% of Sintex’s ₹7,734-crore revenue was generated from its plastic business. Investec Capital Services is advising Sintex on the stake sale.

AS intex spokesperson said the information is wrong, without elaborating further. Spokespersons for TPG and Blackstone declined to comment. Mails sent to Carlyle and Investec spokespersons went unanswered.

“For the PE funds, it’s a good opportunity to be part of the potential growth of Sintex plastic business. The listing will automatically open a exit route in future,” said the second person cited above on condition of anonymity.

The Sintex board had approved the demerger of the custom moulding business and the prefab business from Sintex Industries to Sintex-BAPL and Sintex Infra Projects, respectively. The two entities are wholly owned subsidiaries of Sintex Plastics.

“Custom moulding business, including prefabricated and monolithic housing, is a high-capacity and low-utilisation business. It will be cash positive with the demerger of the business. The impetus provided to housing sector in the form of EWS (economically weaker section) housing and incentivising through lower interest rate would be of great help in pushing custom moulding business,” said a January report on Sintex by Karvy Stock Broking Ltd.

After the demerger, the textile business will remain under Sintex Industries. Sintex cited value unlocking as the reason for the demerger. The demerger will deleverage the plastic side of the business, which will generate free cash flow and higher return on capital employed, according to the company management.

Besides production of water tanks, Sintex is also engaged in manufacturing pre-fabricated structures for classrooms, booths, kiosks and office rooms.