PE firm Creador buys Godrej Consumer’s Indonesia foods business for $35M
Private equity firm Creador has acquired the Indonesia-branded foods business of Godrej Consumer Products Ltd, considered to be non-core by the Indian company. The PE firm has bought PT Simba Indosnack Makmur (Simba), which was acquired by Godrej Consumer as part of its $270 million deal to acquire the Megasari Group in 2010. Creador, which has recently closed its maiden fund of $135 million, primarily focuses on growth capital transactions in India, Indonesia and Malaysia.
Simba is the second largest cereal player in Indonesia and also has significant presence in the snacks segment. It has grown significantly in 2012, generating revenues of $22 million. While the transaction size was not disclosed, one source familiar with the development said that the acquisition was done for approximately $30-34 million. The transaction is expected to close in two months and HSBC was the exclusive advisor to Godrej Consumer on the deal.
“Our decision to divest the foods business is very much in line with our strategic intent to focus on home and personal care. The divestiture of this business will improve the margin profile of our Indonesian business and help the team to take the household and personal care platforms to full potential. The consideration from this divestiture will further strengthen our balance sheet,” said GCPL chairman Adi Godrej.
The deal is in line with Godrej Consumer’s 3x3 strategy of focus on hair care, home care and skin cleansing in the emerging markets of Asia, Latin America and Africa. An analyst said, on the condition of anonymity, that the deal would not have any significant impact on Godrej’s top line.
The deal with Megasari gave Godrej Consumer brands in products across insecticides, wet tissues, air fresheners, food wrappings, drain openers, bleach, metal polishers and rat glue in Indonesia besides a distribution network.
Shares of Godrej Consumer, which is backed Singapore’s sovereign wealth fund Temasek, closed at Rs 723 a unit on Friday, up 0.10 per cent in a Mumbai market which was up 0.9 per cent.
This will not be the first time an Indian firm has divested an overseas business to a private equity firm in the recent years. Last year, Reliance MediaWorks Ltd, the film and entertainment services arm of the Reliance ADA Group, sold its film exhibition business in Malaysia to buyout fund Navis Capital Partners. In 2011, 3i Infotech sold its US-based global billing & payments unit to Cerberus Capital Management, L.P., for $137 million. US-based private equity firm Summit Partners also acquired the managed services business unit of BSE-listed Zenith Infotech in 2011.
Leveraging India network
The deal is Creador’s fourth investment and first control transaction since its inception in 2011. Its portfolio companies include India’s Cholamandalam Investment & Finance Company Ltd, Malaysia’s OldTown White Coffee and Indonesia’s PT MNC SkyVision.
Creador said that with single-minded focus on this food business, new initiatives in expanded distribution and new products, Simba can grow at a faster pace. Creador will take 100 per cent stake in the business including existing management and will also rope in a new CEO in a few months.
“Indonesian cereal consumption is one of the lowest in the region. The market grew at 16 per cent in value terms between 2006 and 2011, and prospects for continued growth are excellent. Simba is the No. 2 player with 17 per cent market share, second only to Nestle. Simba’s products also cater to the $1.5 billion Indonesian snacks market,” said a statement from Creador.
“This acquisition demonstrates our commitments to making growth investments in Indonesia and reflects strong capabilities in both Indonesia and India. PT Simba has a number of leading Indonesian brands in the cereals and snacks business with excellent growth prospects,” said Brahmal Vasudevan, founder & CEO of Creador, in a release. Vasudevan was the former MD at India’s largest independent private equity firm ChrysCapital.
(Edited by Sanghamitra Mandal)
In a welcome move, the Ministry of Corporate Affairs on 19 July 2016 issued a notification amending the Compan
Creador Advisors India Pvt. Ltd. is engaged in providing advisory services. It advises the fund managed by Creador LLC. The firm provides services like identifying investment opportunities, conducting diligence and providing strategic counsel to Creador in this exciting growth market. The company was incorporated in 2011 and is based in Chennai, Tamil Nadu.