Private equity firm Everstone Capital has agreed to acquire the bakery business of FMCG giant Hindustan Unilever Ltd housed under its unit Modern Foods for an undisclosed amount.
Hindustan Unilever has signed an agreement to sell the business along with its brands to Everstone-controlled firm Nimman Foods Pvt Ltd. The company said the move was part of its decision to exit non-core businesses, adding it wants to focus on its core packaged food business.
“Since its acquisition in 2000, HUL has strengthened the Modern business, driven consistent top-line growth and significantly improved profitability. Having turned around the business and build a sustainable growth model, we believe that the sale to Everstone will unlock the full potential of the Modern brand,” said Sanjiv Mehta, CEO and managing director of HUL.
HUL sells various breads besides value added bakery products such as cakes, muffins, buns, pavs, cream rolls under the brand Modern. The business currently has six own operating manufacturing units and a network of franchisees across India.
Modern is part of the packaged foods segment of the firm that comprises products such as jams, ketchups and squashes under Kissan; soups, soupy noodles and meal makers under Knorr; branded staples (atta and salt) under Annapurna and frozen desserts/ice creams under Kwality Walls and Magnum.
Overall the packaged foods unit grew 15 per cent with segmental profit growing by a robust 36 per cent last year. The bakery unit also sported good performance both in terms of top-line and bottom-line but it is stuck in a low growth industry due to challenges posed by other breakfast options and low entry rate in the segment.
Bakery and breads in particular is a highly fragmented industry with Britannia being another large national level player.
“Modern is a marquee brand which has strong recall and a long-standing history. Everstone is committed to making significant investments in not only unlocking the brand’s true potential, but also managing it as an independent company,” said Sameer Sain, co-founder and managing partner of the Everstone Group.
Everstone, co-founded by Sain and Atul Kapur, has been an active PE investor in the country and is currently raising a new PE fund. It has a separate pan-Asian food and beverage business platform along with one of its key investors Verlinvest, F&B Asia Ventures Ltd, through which it has invested in several firms in India and Southeast Asia.
In July, it inked a deal to invest up to Rs 85 crore (approximately $13.4 million) in restaurateur Zorawar Kalra's Massive Restaurants, which runs the Indian-themed Masala Library, Made in Punjab and Farzi Cafe chain of restaurants and cafes.
Everstone Capital has invested Rs 1,200 crore in F&B Asia, which has under it fold assets such as Pind Balluchi, Harry's, The Disgruntled Chef, besides local franchise of Domino's in Indonesia and Burger King in India and Indonesia, among others.
Everstone Capital’s portfolio also includes Blue Foods that runs brands like Spaghetti Kitchen, Noodle Bar, Bombay Blue and Copper Chimney, and JS Hospitality Services that owns the brand, Pind Balluchi.