Barely four months after acquiring a majority stake in small bakery chain Love Sugar Dough, fine dining restaurant chain Speciality Restaurants Ltd is selling the stake back to the founder promoters of the Mumbai-based firm.
Its board has approved the sale of 51 per cent stake to Nauzad Munshi and Tarannum Merchant, promoters of Love Sugar Dough, according to a stock market disclosure.
It said the stake is changing hands for Rs 57 lakh. This marks a climb-down from a year ago when Speciality Restaurants first announced it will buy the stake for around Rs 75 lakh.
Love Sugar Dough is a Mumbai-based company set up in 2011 by Munshi and Tarannum. It has eight bakery stores spread across Mumbai, Pune and Surat and was looking to scale up and expand the stores in other cities.
Munshi told VCCircle that as per the agreement, the promoters of Love Sugar Dough were to match fresh investments by Speciality Restaurants and since they were not able to, they bought back the stake.
He added that Love Sugar Dough is now planning to explore some VC investment opportunities or to induct other partners to fuel its growth plans.
An emailed query sent to Speciality Restaurants on the rationale behind the decision did not elicit any response by the time of filing this article.
Speciality Restaurants, which went public three years ago, operates brands like Mainland China, Oh! Calcutta, Machaan, Sigree Global Grill, Flame & Grill, Haka, KIBBEH, Kix, Shack and a confectionery brand, Sweet Bengal.
Last year, it formed a joint venture company in Qatar in partnership with Al-Mohannadi Group to expand its flagship brand serving oriental cuisine Mainland China overseas.
SAIF Partners, which had backed the company before it went public, has been adding to its holding over the recent past and as of March 31, 2015 held 19 per cent stake in the firm.
The PE firm had originally invested in the company in 2007. It stayed put as Speciality Restaurants went public in mid-2012 but has been raising its holding for the last one year.
The restaurant chain also counts Wipro chairman Azim Premji as a private investor.
Shares of Speciality Restaurants were trading at Rs 172.20 each, down 1.15 per cent on BSE in a weak Mumbai market on Wednesday at 1.25 PM.
(Edited by Joby Puthuparampil Johnson)