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Recap 2015: Top PE deals in consumer sector

28 December, 2015

The consumer goods and services sector recorded the second-biggest private equity deal ever this year as investors remained confident about the domestic consumption story despite the economy growing at a slower pace than previously projected.

From the investors’ perspective, Singapore state investment firm Temasek and PremjiInvest, the private investment arm of Wipro chairman Azim Premji, returned to strike big transactions and remained in the top deals chart as the previous year.

Here’s a quick look at the top deals in the consumer products and services space:

Advent, Temasek buy into Crompton Greaves’ consumer unit

Gautam Thapar-controlled Avantha Group inkeda deal to sell its entire 34.3 per cent stake in the consumer products business of engineering firm Crompton Greaves Ltd to a special purpose vehicle created by PE firm Advent and Temasek for Rs 2,000 crore. Advent is the lead investor in the SPV. The transaction, expected to be completed in the first quarter of 2016, marks the second-biggest deal ever in the consumer space after Bain Capital led a deal to invest in motorcycle maker Hero MotoCorp. Indeed, that deal also included Singapore’s sovereign wealth fund GIC, a sister concern but runs separately from Temasek.

Mandala Capital backs Jain Irrigation’s food business

Jain Irrigation Systems Ltd, India’s largest micro-irrigation firm, said it would raise Rs 683 crore ($103 million) from Mandala Capital by issuing shares in the company and its processed food subsidiary. The transaction is one of the single-biggest investments in the country’s food and agriculture sector. Mandala Capital, which started investing in Indian food and agriculture businesses last year, committed to put in around $60 million in Jain Farm Fresh, valuing it around Rs 2,500-3,000 crore as part of this transaction. Interestingly, that equals the current market value of its listed parent.

PE consortium buys chunk of KFC and Pizza Hut outlets

A consortium of investors including private equity firms Samara Capital, CX Partners and IDI Emerging Market Partners besides Goldman Sachs came together to acquire117 KFC outlets and 91 Pizza Hut restaurants from American fast food restaurant company Yum! Brands, Inc and its franchisee partners. This was the second such instance where a PE firm or a group of them are partnering or coming in as a master franchisee for an international QSR chain in India after Everstone tied up with Burger King. It is also the second investment in the restaurant business for several participants such as Goldman Sachs, Samara and CX Partners.

Everstone buys out HUL’s bakery unit

In another major buyout transaction this year, private equity firm Everstone Capital bought the bakery business of FMCG giant Hindustan Unilever Ltd housed under its unit Modern Foods. Although the deal value was not disclosed, it is estimated to be around Rs 250 crore. HUL said the move was part of its decision to exit non-core businesses, adding it wants to focus on its core packaged food business. Everstone that has a separate platform with Verlinvest for food and beverage business, had lately been actively building its restaurants related portfolio.

PremjiInvest bets on FMCG firm Hygienic Research

PremjiInvest invested Rs 218 crore ($33 million) to pick up a significant minority stake in Mumbai-based consumer products company Hygienic Research Institute Pvt Ltd. Hygienic, which owns Super Vasmol and Streax brands of hair colour products, is particularly interesting as Wipro itself has a consumer care business that makes soaps, fragrances and skin care products. Premji is also an investor in Marico Ltd, the maker of Parachute hair oil.

Creador invests in PC Jeweller

South- and Southeast Asia-focused private equity firm Creador invested a little over $30 million to buy a 4.4 per cent stake in Mumbai-listed PC Jeweller Ltd at the beginning of the year through secondary market share purchases. This was the PE firm’s sixth deal in India. This also kept jewellery retail among the most attractive segments in the consumer sector for a second year running. In 2014, Warburg Pincus had invested around $195 million in Kerala-based Kalyan Jewellers India Pvt Ltd.

Click here for the highlights of the year.

Note: This article has been modified to include an additional transaction.


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Advent and Temasek make $251 mn open offer for Crompton Greaves Consumer

Advent and Temasek make $251 mn open offer for Crompton Greaves Consumer

Anuradha Verma 1 year ago
Private equity investor Advent International Corp and Temasek Holdings Pvt. Ltd,...
Advent and Temasek’s open offer for Crompton Greaves Consumer fails

Advent and Temasek’s open offer for Crompton Greaves Consumer fails

TEAM VCC 1 year ago
Private equity firm Advent International Corp and Singapore state investment...
Avantha to sell entire 34% in Crompton Greaves Consumer to Advent & Temasek for $316M

Avantha to sell entire 34% in Crompton Greaves Consumer to Advent & Temasek for $316M

TEAM VCC 2 years ago
Gautam Thapar-controlled Avantha Group has inked a deal to sell its entire 34.3...
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Recap 2015: Top PE deals in consumer sector

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