MUMBAI: Private Equity firm Lighthouse Funds has purchased a 12.5 per cent stake in snacks maker Bikaji Foods International for Rs 90 crore, the company said Wednesday valuing the unlisted company at roughly Rs 720 crore.
The Rajasthan-based snack maker will use the funds to expand its manufacturing and distribution to markets outside North India and to enter the fastest growing ready-to-eat food market. Economic Times had first reported the proposed investment on March 19.
Bikaji Foods makes snacks like bhujia, papad, namkeens and sweets, and exports a few of these products, besides running quick-service restaurants in Mumbai under the Bikaji Food Junxon brand.
In 2013, Indian Credit Rating Agency or ICRA, had considered Bikaji's strong brand and established distribution network for its rating. "Financial health of the company also remains comfortable, as reflected in the relatively low gearing of the company, low working capital intensity of operations and healthy debt protection indicators," ICRA said. It, however, raised concerns on the fragmented and unorganised market in which local companies compete with brands like Bikaji and the pressure on the company's gearing ratio, as it chose to expand through debt.
Lighthouse Funds provides early and growth stage investments to mid-market companies. Through its 2008 vintage fund, it invests in healthcare, education, rural consumption and agribusiness companies.
The PE fund is in the process of raising its second fund, India 2020 Fund II, of around $150 million, with firm commitments of over $75 million from investors or Limited Partners in industry parlance. Investment bank Intensive Fiscal Services was the sole financial advisor to the transaction.
(As published in The Economic Times on Wed, 16 Apr 2014)