Motilal Oswal Private Equity Advisors has picked up 22% in Ludhiana-based Rs 500-crore Cremica Foods, through a secondary transaction, paving the way for an exit for existing investor Goldman Sachs.
Global investment major Goldman Sachs invested $15 million in 2006 in the firm, which was set up as a small enterprise by Mrs Rajni Bector, a passionate food enthusiast, three decades ago. The Cremica Group, which has today metamorphosed into a Rs 500-crore food company, makes biscuits, condiments and sauces, and supplies to McDonald's, Pizza Hut and Cafe Coffee Day.
According to sources, Motilal Oswal Private Equity Advisors Private Limited, the private equity arm of Motilal Oswal Financial Services Limited, has bought Goldman Sachs’ 22% stake for about $15 million in the firm, indicating an exit at par for the investment major, sources familiar with the development said. o3 Capital is advising on the transaction.
E-mails sent to Cremica, Goldman Sachs and Motilal Oswal PE did not elicit any response at the time of posting this story.
This will be the second investment for Motilal Oswal PE in the food industry. In one of its biggest deals till now, the PE firm invested $13.98 million in Parag Milk & Milk Products Pvt Ltd in 2008. The sector agnostic PE fund has a bias towards themes linked to the domestic consumption story. The PE fund, which has invested about 70% of its corpus from the first fund, is looking at exhausting the fund fully by the end of this year.
“We are excited about companies in food space and have made some investments there. There is a possibility of creating strategic value," Vishal Tulsyan, CEO, Motilal Oswal PE told VCCircle in a recent interview. Since 2007, Motilal Oswal PE has made about 11 investments worth $64 million through its India Business Excellence Fund, a $125-million sector agnostic fund.
According to VCCedge, a financial research platform of VCCircle, about 24 deals worth $237 million took place in the Indian packaged food industry since 2000. Among the top deals is Carlyle’s $22-million investment in Tirumala Milk Products in June 2010.
Goldman Sachs has made a few major exits so far from NCDEX (sold to Shree Renuka Sugars), ICSA India Ltd and Kotak Securities. Since 2005, about five exits worth $189 million through M&A route took place in this space. In June 2010, McCormick & Company Inc. acquired 26% stake in Eastern Condiments Pvt. Ltd for approximately $35 million (Rs 161 crore) from PE investor-New Vernon Private Equity. In April 2010, Indivision I, a fund managed by Everstone Capital Management, exited Mumbai-based Capital Foods Ltd for an undisclosed amount.