Private equity firm New Silk Route is set to buy the stake it doesn’t already own in Bengaluru-based Vasudev Adiga’s Fast Food Ltd, a development that will end a bitter legal spat between the principal shareholders of the company.
The Economic Times reported, citing people involved in the negotiations, that the Adiga family is likely to sell its 40% stake in the fast food chain for Rs 50 crore.
The family is represented by KN Vasudeva Adiga and his younger brother Parameshwara Adiga on the company’s board. They had accused the PE firm, which had invested in the company in 2012, of mismanagement and oppression.
According to the report, the Adiga family had opposed all resolutions passed by the board of the company since NSR bought a majority stake in the company. This led both the parties to fight their ways out legally. In 2014, the Karnataka High Court allowed an independent administrator to run the affairs of the company.
Vasudev Adiga’s has 14 restaurants in Bengaluru. Adiga’s is an offshoot of Brahmin’s Coffee Bar at Basavangudi, in Bengaluru, which was started in 1965 by late KV Nageshwar Adiga. The company is now run by second-generation entrepreneur KN Vasudev Adiga, an engineering graduate, and his younger brother Parameshwara.
Apart from Adiga’s, a couple of other restaurant chains have also been embroiled in tussles with their PE investors.
Three years ago, Banan agreed to sell his 22.7% stake in Sagar Ratna. However, IEP didn’t respond to the offer, leading Banan to file a police complaint in 2014. Banan had accused the restaurant’s current management of cheating and forgery of documents.
In a similar instance, Cocoberry Restaurants and Distributors Pvt. Ltd, operator of a chain of outlets that sell frozen yogurt, got embroiled in a legal spat with one of its high-profile PE investors. Ajay Relan, co-founder of PE firm CX Partners and an investor in Cocoberry, had dragged the Gurgaon-based company to court over its failure to repay a loan of Rs 3 crore.
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