Firmenich acquires VKL Seasoning to give True North second exit of 2019
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Switzerland-headquartered fragrance and flavours major Firmenich SA announced on Tuesday that it has acquired a majority stake in food ingredients maker VKL Seasoning Pvt. Ltd from private equity firm True North.

The development comes days after VCCircle reported that Firmenich was set to seal the buyout.

The companies declined to provide financial specifics but VCCircle had previously learnt that the deal would likely be struck at a valuation of around Rs 800 crore (around $114 million at the current exchange rate).

True North, earlier known as India Value Fund Advisors, had invested around $40 million (about Rs 240 crore) in VKL Seasoning, which makes spices, flavours and other food ingredients, in 2013. This is True North's second exit of 2019. Last month, it sold its stake in infrastructure company B2B Logistics Solutions Pvt. Ltd.

The acquisition of VKL Seasoning will boost Firmenich’s capabilities and customer reach in India and expand the company’s raw material palette for clean label ingredients,  the company said in a statement.

VKL Seasoning will retain its brand identity and will operate as a standalone business under the Firmenich umbrella.

“India is a critical market for Firmenich and we are committed to investing in our business here both for short and long-term growth,” said Patrick Firmenich, chairman of the company’s board. He added that both firms had complementary portfolios in the food and beverage segments.

Firmenich operates in India through Mumbai-based unit Firmenich Aromatics (India) Pvt. Ltd. The company had appointed Satish Rao as the chairman and managing director of the India business in 2016.

“This joint venture underpins Firmenich’s ongoing commitment to India, one of our fastest growing markets,” said Rao.

Founded in 1996, VKL Seasoning Pvt. Ltd makes seasoning and flavours. It gets a lot of its revenue from the quick-service restaurant (QSR) segment, where its clients include Yum! India, Domino’s Pizza, McDonalds India and Burger King, according to a report by Care Ratings.

“In a world of increasingly label-conscious consumers, VKL’s unique blends of spices, extracts and other natural ingredients will enrich our portfolio of authentic taste profiles,” said Firmenich chief executive officer Gilbert Ghostine.

VKL Seasoning reported consolidated net sales of Rs 209.5 crore for the year through March 2018. The company's revenue had risen 12.7% from Rs 185.8 crore for 2016-17, according to VCCEdge, the data research platform of VCCircle.

The company's earnings before interest, tax, depreciation and amortisation jumped to Rs 15.4 crore for 2017-18 from Rs 28.6 crore the year before while net loss shrank to Rs 91 lakh from Rs 18.8 crore.

Meanwhile, True North is now focusing on closing its sixth fund, which will be its largest corpus to date. It is likely to mark the final close at around $900 million over the next few months.

After taking co-investments into account, True North may end up with a commitment of up to $1.5 billion for the sixth fund.

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