Private equity investor Lighthouse to buy 25% in Bikaji Foods

MUMBAI: Global private equity investor Lighthouse Funds will purchase a 25% stake in snacks maker Bikaji Foods International for Rs 120 crore, said two people with direct knowledge of the development.

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-toeat food market. "Lighthouse Funds has signed the agreement to invest in the company. The investment will be a deferred one," said an investment banker with knowledge of the development.

ET was the first to report the company's plans to raise capital on November 27. Unlisted 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.

Lighthouse Funds' partner Sachin Bhartiya declined comment, while Bikaji Foods managing director Deepak Kumar could not be reached for comments despite repeated attempts.

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," ICRAsaid. 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

(As published in The economic times Mar 19, 2014)