* 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 by vegetarians (Updates dateline, adds analyst comment, details from stake seller Electra, bullet points)
By Aravind K and Esha Vaish
Dec 20 (Reuters) - Canadian label and packaging maker CCL Industries Inc said it would buy Innovia Group, which supplies the new UK plastic five pound note that has fallen foul of vegetarians, for around C$1.13 billion ($842 million).
The acquisition of UK-based Innovia is expected to make CCL the world leader in the fast-growing polymer banknote market.
Britain is one of the largest economies to adopt plastic banknotes and they are already in circulation in Canada, Mexico, New Zealand and Australia.
But the new five pound note, made of a thin and flexible plastic designed to be cleaner and harder to forge, has fallen foul of thousands of people who object to the use of animal fats in their manufacture.
The deal is the latest in a string of takeovers of British companies by foreign firms that have taken advantage of the sharp fall in the sterling since Britain voted to leave the European Union.
British tech company ARM was snapped up by Japan's SoftBank Group Corp in the days after the Brexit vote and Rupert Murdoch's Twenty-First Century Fox Inc has struck a preliminary 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 a consortium of UK-based private equity investors managed by The Smithfield Group LLP. It expects Innovia to generate net revenue of about C$570 million for 2017.
CCL's pro-forma annual sales are forecast to exceed C$5 billion after the deal, expected by the end of first quarter of 2017, the company said.
Some of the stake is being sold by Epiris, the portfolio manager of Electra Private Equity, which invested 40 million euros ($41.53 million) in Innovia in 2014.
For Electra, the deal comes in the midst of its separation from its investment management team that renamed itself Epiris this month, as part of a major shake up of Britain's oldest private equity firms.
It also comes a day after Electra's portfolio manager agreed to 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 of 106 million pounds at current exchange rates, representing a return of about 3.2 times cost and an internal rate of return of about 51 percent.
Following the two sales, Electra's pro-forma net asset value per share is about 5,251 pence, against which the company is trading 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)