GEM India Advisors (GIA) and former Goldman Sachs' partner Hank Uberoi's fund Haystack have pumped in Rs 14 crore in Bakers Circle (India) Pvt Ltd, a maker of frozen bakery and confectionery products.
While GEM India invested around Rs 10 crore in the current round, the rest came from Haystack. Uberoi, who would join the board of the firm, had been the COO of Citadel Investment Group, one of the largest hedge funds, after he left Goldman Sachs.
Bakers Circle had raised Rs 11.5 crore in its earlier rounds.
The Gurgaon-based company makes breads, including French baguettes, rolls, burger buns and pizza dough; flavoured cakes like chocolate & strawberry; hot & cold pies and quiches. The firm also provides laminated dough, including croissants & pastries, cookies, muffins, chocolate mousse, brownies and other confectionery products.
Bakers Circle supplies its products to a number of international quick service restaurant chains like Cafe Coffee Day (CCD), Subway, Yum (both Pizza Hut and KFC), Domino’s Pizza, Fast Trax and Papa Johns, among others.
Interestingly, the past few years have witnessed India’s fast food market boom and it is expected to grow further, with the entry of chains like Dunkin Donuts and Starbucks.
Confirming the development, Bakers Circle founder and managing director Dev Lall said that the company would be raising the output and capacity by 3-4 times for the next three years. Capacity and output would be increased from 75,000-80,000 cases per month to 300,000 cases per month by end of this year.
“Business in the last two fiscal years has grown 35-37 per cent per annum on an average and that’s what is forecast for the next three years,” said Lall, who had set up the company in 2001. According to him, there are several factors contributing to market growth. For instance, there is better acceptance of the product. Also, the entry of new brands requires high-quality products. Expansion programmes by existing players and changing dynamics of consumer taste have also triggered market growth.
With this round, GIA has increased its already significant stake in Bakers Circle, informed Deepak I. Shahdadpuri, who currently manages GIA’s portfolio. Shahdadpuri launched GIA, an early stage consumer venture and growth fund in 2004, before teaming up with Alok Sama and Brij Singh to launch Beacon India Private Equity in 2006.. However, GIA will not make any new investments but will continue to make follow on investments into their portfolio. GIA was structured to have more flexibility, does not have a specified fund life and continues to remain invested in companies who are still delivering growth, Shahdadpuri said, adding new investments will be considered by Beacon.
“When we invested in Bakers Circle, it was posting revenues of a few crores, which is expected to reach nearly Rs 40 crore this fiscal,” said Shahdadpuri, adding that the market had seen significant growth only during the past 2-3 years.
Bakers Circle was one of the nominees for the best VC-backed consumer companies at the recent VCCircle Awards 2012 which was coincidentally won by another GIA portfolio company Nashik Vintners Pvt Ltd (which runs Sula Vineyards).
According to Shahdadpuri, investments in both Nashik Vintners and Bakers Circle had been made keeping in view of India’s consumption growth. GIA continues to hold a significant stake in Nashik Vintners even after making two partial exits.