UPL to divest 12.5% stake in seeds arm Advanta to Alpha Wave Global for $350 million

Global agrochemical manufacturer and distributor UPL Ltd. has informed the exchanges that it has signed definitive agreements with Alpha Wave Global, under which the latter will invest $350 million to acquire approximately a 12.5% stake in its seeds business, Advanta Enterprises.

The transaction will involve a combination of a primary investment of $100 million and a secondary sale of shares of $250 million in Advanta by UPL.

The primary proceeds will be used to advance Advanta’s growth through organic and inorganic initiatives, capitalizing on its superior competitive positioning and robust tailwinds within the global seeds industry.

The secondary proceeds will be utilised by UPL to deleverage its balance sheet.

This transaction marks the second investment by a global investor in Advanta, following a $300 million investment by global investment firm KKR in October 2022.

UPL is also planning to launch an IPO of Advanta Enterprises

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CNBC-TV18 had reported in April 2024 that UPL is looking to launch Advanta’s IPO in financial year 2025 and is likely to seek a $4 billion valuation for the seeds business.

UPL was likely to divest stake between 10% and 12% through the Advanta IPO, CNBC-TV18 had reported, citing sources with knowledge of the matter.

Currently, UPL owns a 86.7% stake in Advanta, while the rest is owned by KKR, the private equity player, who had acquired that stake in September 2023 for $300 million.

For financial year 2023, Advanta had reported revenue of ₹3,558 crore and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of ₹921 crore.

“We believe that via a combination of organic growth driven by customised products sold into markets where Advanta has dominant positions, as well as tuck-in acquisitions, Advanta has an exciting path ahead of it in compounding the scale of the business. We are particularly excited to partner with Jai Shroff and his outstanding team, as well as KKR, and help add value in building the business in the years leading up to a potential IPO,” said Navroz D Udwadia, Co-Founder and Partner of Alpha Wave Global.

Shares of UPL settled 1.60% higher at ₹545.50 on Tuesday. The stock has tumbled 8% so far this year.