Private equity fund Everstone Capital is in talks with Bangalore-based beauty and spa salon chain You Look Great (YLG) including its existing financial investor Helion Venture Partners, to pick up a majority stake in the company, a person with direct knowledge of the matter said.
Attempts to reach Rahul Bhalchandra, managing director and co-founder of YLG did not elicit any response till the time of writing this report. But, in an e-mail response to queries from VCCircle, Everstone said, “Yes, we are in conversation with YLG and Helion to partner with them but we are still in evaluation/diligence stage and we have not yet reached the term-sheet stage.”
Helion Venture is expected to stay put as an investor even if Everstone is able to strike the deal to pick majority stake in YLG.
Majority stake buys by PE firms in consumer companies are gaining currency. Earlier, India Equity Partners picked up a majority stake in Delhi-based restaurant chain Sagar Ratna.
In 2009, Helion Venture invested Rs 20 crore into the salon and spa chain with which the firm expanded from just one outlet to 18 in Bangalore and one in Pune. The company was set up in 2009 by ex-employees of Future Group. The founders include Rajiv Bopaiah, who was the chief of the health and beauty division besides Rahul Bhalchandra, who was the head of wellness business at Future Group.
In an earlier interview with VCCircle, the company had indicated plans to expand to 100 stores by end of FY 11.
“The company has high growth plans for which a second round of fund raising will be done,” the source said.
According to VCCEdge, the financial research platform of VCCircle, the company R&R Pvt Ltd., which owns YLG brand saw its turnover rise 73.07 per cent to Rs 10.35 crore for FY 11. The company cut its loss marginally to Rs 7.46 crore for FY 11 as against a loss of Rs 8.76 crore in FY 10.
The other leading beauty salon chains include noted hair stylist Jawed Habib’s firm Jawed Habib Hair & Beauty Studio, Ambika Pillai and Limelight of Cavinkare's C K Ranganathan. Asit Koticha of ASK Group has also invested in the Mumbai-based franchisee of French salon Jean Claude Biguine (JCB).
VLCC is another player in the business funded by CLSA Private Equity and Indivision India Partners. CLSA exited VLCC two years ago.
Everstone's other investments in the consumer products domain include owner of Sula Wine Nashik Vintners, Faces Cosmetics, and Pan India Food Solutions. Everstone owns majority stake in Faces and Pan India. Everstone also invested and exited from Capital Foods and kidswear apparel retail chain Lilliput over the last two years.