Adyar Ananda Bhavan Sweets and Snacks Pvt. Ltd, which runs a southern restaurant chain Adyar Ananda Bhavan has revived plans to bring a private equity investor on board and is now also looking to sell a controlling stake.
The privately held firm founded by KS Thirupathi Raja and now run by brothers K T Venkatesan and K T Srinivasa Raja, is speaking to PE firms KKR, Samara Capital and The Carlyle Group, a report in The Times of India said.
"We have appointed Deloitte to help us raise capital to grow. We cannot share any more information at this stage," K T Srinivasa Raja, managing director, Adyar Ananda Bhavan, told the newspaper.
The firm did not immediately respond to a VCCircle’s request for comment; Carlyle and KKR declined comment. Samara Capital, too, did not respond to an email query.
The Times of India report also said that one of the brothers could exit as part of this transaction that could value the restaurant at Rs 1,800 crore.
This would be Adyar Ananda Bhavan’s second attempt at a private equity deal. The firm had looked at a PE funding three years ago, according to a report in The Economic Times in October 2013.
There haven't been many PE control deals in the restaurants business. New Silk Route (NSR) had sewn a couple of them in the past.
The PE firm, which was involved in a spat with the founders of Vasudev Adiga’s Fast Food Ltd, is now buying out their stake in the firm to The Economic Times.
The PE firm also picked majority stake in Moshe's and has now appointed Lodha Capital Advisors as a banker for an exit from this firm, according to an earlier Mint report.
While there have been just few PE buyout deals due to the fragmented nature of the industry and small size of individual players, investors have backed several restaurant chains with growth equity capital.
SAIF Partners-backed Speciality Restaurants (Mainland China among other brands), CX Partners invested in Barbeque Nation and Temasek and ICICI Venture had backed Devyani International (franchisee for several quick service restaurants (QSR) besides operator of Vaango), Goldman Sachs backed Azure Hospitality (Mamagoto and others), TVS Capital (The Yellow Chilli, Papa John's Pizza) and Aditya Birla PE backing Olive Bar & Kitchen.
PE firm Samara Capital, which has been cited as one of the potential buyers for Adyar Ananda Bhavan, itself has backed few restaurant chains. In 2014, it picked up a stake in Hyderabad-based Paradise Food Court and also joined others to buy a set of QSR and casual dining outlets under the Kentucky Fried Chicken (KFC) and Pizza Hut brands in India.
Everstone has a whole platform focused on the restaurants & food business and also runs the franchisee for Burger King in India.
Given the large size of Adyar Ananda Bhavan, the proposed deal could be the biggest PE transaction in the restaurant space.
The company posted revenues of Rs 566 crore with net profit of Rs 18.8 crore for 2014-15, according to VCCEdge, the data and research platform of News Corp VCCircle. It is yet to file its financials for FY16 with the RoC. Listed peer Speciality Restaurants that was half its size in FY15 currently commands a market cap of Rs 406 crore.
The number of private equity deals in the restaurant segment slid in the first eight months of 2016 after hitting a peak in 2015. A total of nine deals were struck in the January-August period of this year against 21 last year, according to VCCEdge.
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