Private equity firm WestBridge Capital Partners has made a voluntary open offer to raise its stake in snacks maker DFM Foods Ltd to 51 per cent.

WestBridge, which already owns close to 25 per cent stake in DFM Foods, has offered to buy up to 26 per cent more from public shareholders. The purchase may cost it as much as Rs 344 crore ($52 million).

It has offered to buy shares at Rs 1,320 each. Shares of DFM Foods shot up five times in the past one year, and are currently trading around Rs 1,530 apiece. This may not allow the PE firm to make a big success out of the open offer.

However, if the promoters choose to participate in the open offer, WestBridge can indeed become the majority stakeholder in the listed firm.

The PE firm had originally acquired the stake from DFM Foods promoters at Rs 259.1 a share.

DFM Foods was spun off from the Delhi Flour Mills, which was launched by RP Jain in 1993. It is now run by Jain’s son Mohit. The company sells packaged salty snacks such as CRAX Corn Rings, CRAX Namkeen and NATKHAT. The firm has a strong presence in North India and also sells its products in central, western and southern regions. It has been trying to expand its reach to the eastern region as well.

The company posted 10 per cent growth in revenue for the year ended March 31, 2015 and 50 per cent jump in net profit. It reported much faster growth last fiscal with revenue for the first nine months of 2015-16 rising to Rs 266 crore and net profit touching Rs 13.42 crore. In the third quarter, its revenue rose 44 per cent to Rs 101 crore while profit more than doubled.

In a separate development, WestBridge recently added Relaxo Footwears Ltd as its third portfolio company in 2016.

WestBridge, which topped up its evergreen fund to $1.4 billion a few months ago by raising an additional $575 million, has also invested in online B2B platform IndiaMart and NYSE-listed Videocon D2H.

The snacks business has attracted several PE investors in the recent 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 per cent stake. In 2011, Sequoia had invested $30 million in Prakash Snacks.

According to consultancy firm Technopak, the market for branded salty snacks was estimated to be worth Rs 10,000 crore ($1.68 billion) in 2013 and was projected to grow at a compound annual rate of 15-18 per cent over the medium term.

The snacks market in India can be broadly divided into two segments. The first represents western snacks such as potato chips and extruded snacks such as PepsiCo’s Kurkure while the other segment comprises traditional snacks.

PepsiCo leads the western snacks market and, together with other prominent players such as ITC, Balaji, Parle Products, Prakash Snacks and Haldiram’s, accounts for more than a 70 per cent share of the market.

In the traditional snacks segment, Haldiram’s and Balaji Wafers are two prominent brands. The rest of the market is highly fragmented as it is driven by strong regional tastes and preferences.

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