* CCL buying Innovia from group of private equity firms
* Electra Private Equity says makes 106 mln stg from sale
* Innovia's polymer bank notes faces objections byvegetarians (Updates dateline, adds analyst comment, details from stakeseller Electra, bullet points)
By Aravind K and Esha Vaish
Dec 20 (Reuters) - Canadian label and packaging maker CCLIndustries Inc said it would buy Innovia Group, whichsupplies the new UK plastic five pound note that has fallen foulof vegetarians, for around C$1.13 billion ($842 million).
The acquisition of UK-based Innovia is expected to make CCLthe world leader in the fast-growing polymer banknote market.
Britain is one of the largest economies to adopt plasticbanknotes and they are already in circulation in Canada, Mexico,New Zealand and Australia.
But the new five pound note, made of a thin and flexibleplastic designed to be cleaner and harder to forge, has fallenfoul of thousands of people who object to the use of animal fatsin their manufacture.
The deal is the latest in a string of takeovers of Britishcompanies by foreign firms that have taken advantage of thesharp fall in the sterling since Britain voted to leavethe European Union.
British tech company ARM was snapped up by Japan's SoftBankGroup Corp in the days after the Brexit vote and RupertMurdoch's Twenty-First Century Fox Inc has struck apreliminary deal to buy the 61 percent of pay-TV firm Sky Plc it does not already own.
CCL is buying Innovia debt free and net of cash from aconsortium of UK-based private equity investors managed by TheSmithfield Group LLP. It expects Innovia to generate net revenueof about C$570 million for 2017.
CCL's pro-forma annual sales are forecast to exceed C$5billion after the deal, expected by the end of first quarter of2017, the company said.
Some of the stake is being sold by Epiris, the portfoliomanager of Electra Private Equity, which invested 40million euros ($41.53 million) in Innovia in 2014.
For Electra, the deal comes in the midst of its separationfrom its investment management team that renamed itself Epiristhis month, as part of a major shake up of Britain's oldestprivate equity firms.
It also comes a day after Electra's portfolio manager agreedto sell Parkdean Resorts, an operator of caravan holiday parks,for 1.35 billion pounds ($1.69 billion).
Electra said on Tuesday it would receive sale proceeds of106 million pounds at current exchange rates, representing areturn of about 3.2 times cost and an internal rate of return ofabout 51 percent.
Following the two sales, Electra's pro-forma net asset valueper share is about 5,251 pence, against which the company istrading at a 13.9 percent discount, Liberum analysts wrote. ($1 = 1.34 Canadian dollars) ($1 = 0.9632 euros) (Editing by Sriraj Kalluvila and Louise Heavens)
