ICICI Venture, India’s leading private equity fund, is set to pick up equity in Ravi Jaipuria-promoted Devyani International Ltd, which controls a chain of 180 fast-food restaurants across the country. The fund will invest Rs 135 crore in the company.
These restaurants include internationally-acclaimed franchised brands such as KFC, Pizza Hut, Pizza Hut Delivery (PHD), Costa Coffee and Swensens and self-owned brands such as the South Indian restaurant Vaango.
Devyani is the largest franchisee of Yum Brands, which is the largest fast-food restaurant company in terms of system units and operates food joints such as Pizza Hut and KFC brands. It is also the master franchisee for Costa Coffee in South Asia.
ICICI Venture manages assets of over $2 billion in the country, making it the largest Indian fund. An ICICI Venture spokesperson was not available for comment.
According to sources close to the deal, Devyani International Ltd, which has rapidly grown, especially over the last five years, has attracted ICICI Venture, which aims to capitalise on this lowly-penetrated and organised fast-food service restaurant segment, keeping in mind increasing urbanisation and changing social and family patterns.
Private equity funds have been looking at the fast foods space for a while. About a decade ago, in 1999, India Private Equity Fund (Mauritius) and Indocean Pizza Holding Ltd, which had invested (around 20.17 per cent and 11.20 per cent, respectively) in Jubilant Foodworks Ltd that runs Dominos operations in India, had profitably exited through offer for sale during Jubilant IPO in February 2010. In a year, Jubilant has leap-frogged from an issue price of Rs 145 to around Rs 739 as on date, giving it a market capitalisation of over Rs 4,800 crore.
In April 2010, Coffee Day Holding had raised $200 million from NSR, KKR and StanChart private equity. New Silk Route has invested $75 million, while KKR and Standard Chartered PE has invested $75 million and $50 million, respectively. The three PE firms together hold about 25 per cent stake in the company, valuing the company at $800 million. The proceeds are being used to expand their coffee retailing business.
On the global front, Calderazzo, the renowned Italian restaurant and Bistro on Langsuan Road Bangkok, too, have attracted an investment from a private equity firm led by the legendary restaurateur Dr Roberto Ugolini.
Devyani International Ltd is one of the companies promoted by Ravi Jaipuria, who is also one of the largest bottlers for PepsiCo in the country and in some locations abroad.
The Jaipuria group has also forayed into the ice cream business with Cream Bell which has taken on Unilever in north India. It has also collaborated on some real estate projects around Delhi.
Source : Business Standard