By 05 December, 2013

The tussle between private equity firm India Equity Partners (IEP) and its portfolio company Sagar Ratna only appears to be getting deeper. Arvind Nair, CEO and director of  restaurant chain, has decided to quit the chain as well as IEP, the private equity firm that owns the controlling stake in it, following strong differences between the investors and promoters, The Economic Times reported.

“I am exiting IEP and hence Sagar Ratna by December-end,” Nair, an operating partner with IEP told the daily.

Notably, the turf between Jayaram Banan, the chain's promoter, and the private equity fund IEP escalated after the two accused each other of violating the share purchase agreement. IEP, which invested in the chain in 2011 by picking up 75% equity stake, is learnt to have accused Banan of infringing their contract by starting a restaurant chain called Shri Ratnam. On the other side, Banan has accused IEP of destroying Sagar Ratna’s brand value.

Besides going through a tussle with its portfolio company, IEP is also seeing a rift of its own. IEP’s original founders—Gaurav Mathur, Anurag Bhargava and Steven Wisch—have quit. Sid Khanna and KK Iyer are the only two founding partners remaining with IEP.

Recently, Banan proposed to buy back entire equity holding of IEP in Sagar Ratna for Rs 135 crore, which is nearly 25% lower than amount the PE firm had paid for the stake in 2011, the daily reported citing two people privy to the development.

 

The paper said that Nair declined to comment on his decision to quit the company, saying “I joined with intention of building a platform. I don't think IEP has that plan.” Nair has been with the PE firm for over three years.

Sagar Ratna, which is reportedly valued at around Rs 200 crore, is a popular brand of restaurant chain in north India, serving vegetarian cuisine. It owns around 60 restaurants and 35 more restaurants are operated as franchisees.

(Edited by Joby Puthuparampil Johnson)

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