Thursday, April 15

True North puts VKL stake on sale, eyes Rs 1,000 crore deal

MUMBAI: True North Capital, a local private equity fund, is selling its majority stake in food ingredients company VKL Seasoning at a company valuation of $280 million (Rs 2,000 crore), two people aware of the development said. True North, which holds about 55% stake in the manufacturer of seasonings and flavours, has hired investment bank Avendus to manage the sale. The fund had invested about $40 million in VKL in 2013 and is eyeing about $140 million from the exit, one person said.

It is not clear if the promoter Mariwala family will sell its remaining stake in the proposed deal.

A True North spokesperson declined to comment on the planned transaction, while emails sent to Ajay Mariwala, managing director of VKL, and Avendus did not elicit any responses. Established in Alleppey, Kerala, as whole spice dealer in 1935, VKL later expanded into the private label and food ingredients businesses. It sold its bulk spices and private label assets to Olam International Ltd in 2011. Currently, VKL makes food ingredients and flavouring solutions in India and the Middle East with a focus on quick service restaurants and processed food industries.

The company’s offerings include topping marinades, sprinklers (pizzas), bread toppings, patty seasonings, sauces and dressings (burgers), batter, glazes (chicken), cake premixes, red and white sauce and mac & cheese sauce.

VKL’s top clients include Americana Group, Amul, Bikanerwala, Britannia, Cafe Coffee Day, Chick King, Chili’s, Dabur, Domino’s Pizza, Dunkin’ Donuts, Gowardhan Dairy, McDonald’s, Mrs. Bectors, Nestle, Parle, PepsiCo, Pizza Hut and Unibic. The company is the flagship unit of the Mumbai-based Kanji Moorarji Group, which owns Kancor Flavours &Extracts Ltd., Omni Active Neutraceuticals and Autohangar (India) Pvt, a dealer of Mercedes-Benz vehicles in India.

True North (formerly IVFA) acquired the VKL stake through the purchase of primary shares and the stake held by early investor Ascent Capital, which sold its seven-year-old holding in the company. India’s food services sector has always been on the radar of private equity investors. Deals last year include L Catterton Asia’s acquisition of a controlling stake in Impresario Entertainment & Hospitality, which owns fine dining restaurant brands Smoke House Deli and Social; Gaja Capital’s investments in Massive Restaurants, owned by celebrity food writer and chef Jiggs Kalra and his son Zorawar, and Rabo Equity Advisors’ 40% stake buyout in Olive Bar & Kitchen.

India’s food services market, estimated at Rs 3.3 lakh crore in 2017, is projected to grow to Rs 5.5 lakh crore by 2022, according to a FICCI-Technopak report. Mumbai and the National Capital Region contribute 11% each to the food services market, followed by Pune, Ahmedabad, Bengaluru, Chennai, Hyderabad and Kolkata, which account for a 20% share together.

True North Capital has already raised $600 million for its latest Fund-VI with a proposed corpus of $900 million. Besides the $900 million, True North will get an additional co-investment pool of $500 million. From the new fund, True North has made four investments — Fedbank Financial Services, Shree Digvijay Cement, the maker of Sesa Hair Oil and the ortho and pain management business of Glenmark Pharma.

True North, which manages as much as $3 billion under six funds, has a portfolio that includes Magma Fincorp, Home First Finance, Infinity Fincorp Solutions, KIMS hospitals, Trivitron, Cloudnine hospitals and Hicare.

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