Prataap Snacks Ltd, which makes Yellow Diamond chips, has agreed to acquire a majority stake in Gujarat-based snacks maker Avadh Snacks Pvt Ltd.
The Mumbai-listed company said in a statement it is buying an 80% stake in Avadh Snacks through a combination of primary and secondary share purchases for Rs 148 crore ($21 million).
"Our acquisition of Avadh will help us accelerate our growth and deepen our presence in the key market of Gujarat," said Amit Kumat, chief executive at Prataap Snacks.
Launched in 2010, Avadh offers namkeen items such as bhujia, chevda, fafda, gathiya, etc. and extruded pellets like wheels, cups and pasta. It plans to expand to Maharashtra and Rajasthan.
Sequoia Capital-backed Prataap Snacks debuted on the stock markets last year, with its shares gaining 26% on the first day of trading. The company was started in 2003 by brothers Amit and Apurva Kumat and Arvind Mehta. It makes and sells potato-based and extruded snacks, and namkeen.
Five years ago, it acquired the snack foods business of its group company, Prakash Snacks Pvt. Ltd, and brought the Yellow Diamond brand and the snack foods business under one umbrella. The company has a presence in three major categories in India and all products are sold under the Yellow Diamond brand.
Intensive Fiscal Services Pvt Ltd, a Mumbai-based investment bank, advised Prataap Snacks on this transaction.
Last year, Gujarat-based potato chips and snacks maker Balaji Wafers Pvt. Ltd was mulling to float an initial public offering (IPO) to fund its expansion plans while eschewing private equity investment as well as bank credit.
Another listed firm in the space is DFM Foods, which operates under the brand Crax. It counts PE firm WestBridge Capital as a key shareholder.
Other regional players have also attracted private equity interest in the past. In 2014, mid-market-focused private equity firm Lighthouse invested $15 million in Rajasthan-based snacks maker Bikaji Foods International Ltd for a 12.5% stake. In May this year, Lighthouse struck a partial exit from the company.
In 2011, Sequoia had invested $30 million in Prakash Snacks.
Recently, Rajkot-based Gopal Snacks Pvt. Ltd hired an investment bank for its first external fundraising.
Also, the diversified Inox Group was reported to be in discussions to acquire Kanpur-based Daksh Fun Marketing Pvt. Ltd.