Olive Bar & Kitchen out to raise fresh funding; Aditya Birla PE may exit

Homegrown private equity firm Aditya Birla PE, which invested in Olive Bar & Kitchen Pvt. Ltd in 2012, has received interest from potential investors for its stake in the Mumbai-based hospitality firm Olive Bar & Kitchen Pvt. Ltd, a person close to the development told VCCircle.

The company has hired the investment banking arm of EY (formerly Ernst & Young) to look for potential investors.

The person cited above said Olive Bar’s promoters are also targeting to raise up to Rs 150 crore as growth capital during this transaction. The firm has been looking to secure fresh funding for two years now. In 2014, The Economic Times had reported, citing persons it didn’t name, that the company was looking to mobilise as much as Rs 200 crore. This has not materialised to date.

Earlier in the day, the Mint newspaper reported, citing two people familiar with the development it didn’t name, that the PE firm, which owns almost a third of the company, is opting for a complete exit.

Email queries to Aditya Birla PE, Olive Bar and EY did not immediately elicit a response. 

Aditya Birla PE had invested around $10 million in Olive Bar, which runs a chain of premium fine dining restaurants across the country, in 2012 from its Sunrise Fund. 

Established in 2000, Olive Bar is known for its flagship fine dining brand Olive. Promoted by renowned restaurateur AD Singh, it operates a chain of boutique fine dining restaurants straddling multiple genres, a high-profile night club and a niche catering business across Mumbai, Delhi and Bengaluru. Its brand portfolio includes Olive, Monkey Bar, LAP, Ai and Soul. 

Olive Bar’s consolidated revenue rose to Rs 108.8 crore in 2014-15 from Rs 76.8 crore the previous year. Net profit in 2014-15 tripled to Rs 4.65 crore from the year before. The private firm is yet to file financials for the year ended 31 March 2016 with the Registrar of Companies.

Happy cooking?

The number of private equity deals in the restaurant segment slid in the first eight months of 2016 after hitting a peak in 2015. A total of nine deals were struck in the January-August period of this year against 21 last year, according to News Corp VCCEdge, the data research platform of News Corp VCCircle. 

Investors, however, say this indicates a stable deal-making environment after a one-off year. Deal-making this year matches the volume of transactions announced annually in the three years before 2015 when private equity investors made a splash to tap into the Indian consumers' increasing tendency to eat out.

India’s food and beverages (F&B) industry is estimated to grow at an average annual rate of 24% to Rs 3.8 trillion in sales by the end of this financial year as Indians spend about half of their total consumption expenditure on food, according to a report by consulting firm Grant Thornton India and industry group Federation of Indian Chambers of Commerce and Industry (Ficci).

The fast-food segment, which has the largest market share at 45%, is projected to grow 16.6% a year, followed by casual dining, which has a market share of 32%, by 10.1%, according to the Grant Thorton India-Ficci report. 

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