The promoters of Suguna Foods Ltd, formerly known as Suguna Poultry Farm Ltd, are buying back 5 per cent stake held in the company by International Finance Corp (IFC), the Business Standard reported citing the company's managing director GB Sundararajan.
IFC, the private sector lending arm of the World Bank, had invested $29.01 million in Suguna Foods in 2006, of which $11.25 million was equity in lieu of 5 per cent stake while the rest was debt component.
The newspaper added citing sources that the buyback would be at around Rs 150 crore translating into 3x returns for IFC from its equity investment.
Buying back shares from IFC was one of the exit options in the deal apart from an initial public offering. Since the firm is not planning any IPO or bringing another PE investor on board, the promoters are using the buyback route to provide an exit to the investor.
The stake sale by IFC is expected to be completed by November.
Suguna Foods was founded in 1982 by brothers, B Soundararajan and GB Sundararajan. It is one of the country’s largest poultry firms and had used the capital raised earlier to expand breeder, hatcheries and feed-mill capacity.
Suguna also runs Quick Service Restaurant (QSR) business. It currently has a chain of 10 restaurants in Bangalore and is mulling to augment the number of its outlets by the end of March, 2015, the newspaper said adding that the poultry firm reported a turnover of around Rs 5,300 crore in FY14 and is aiming to grow this to around Rs 6,500 crore this fiscal.
(Edited by Joby Puthuparampil Johnson)