New Silk Route invests in Vasudev Adiga’s Fast Food

The size of the transaction was not disclosed but sources cited by LiveMint claimed that NSR's stake in Vasudev Adiga's will increase as more capital is infused for expansion. This would see the private equity firm putting in $30-40 million over the next three years, taking a 40-45% interest in the company.

NSR sees the deal as a means of leveraging the growth in India's middle classes and the positive impact this has on consumer spending. Jacob Kurian, a partner at the private equity firm, said the objective is to help Vasudev Adiga's expand its network, initially in Bangalore and then nationwide.

NSR's investment is the culmination of more than two years spent looking for suitable targets. Kurian revealed last year that a restaurant deal was close. At the time, he said NSR wanted to convert the target company into a holding vehicle for a number of food businesses, comparing the structure to that of Yum Brands, which owns KFC, Pizza Hut and Taco Bell. The private equity firm even advertised for a CFO for the unnamed food company, specifying that experience in M&A would be an advantage.

Vasudev Adiga's was founded in 1994 and runs 11 restaurants in Bangalore and another on the Bangalore-Mysore highway. K.N. Vasudeva Adiga, the company's chairman, said the plan is to open 100 new outlets.

NSR, which is currently investing from a $1.38 billion fund that closed in 2008, previously bought a minority stake in Coffee Day Group, which owns Café Coffee Day, India's largest coffee chain. NSR invested alongside KKR and Standard Chartered Private Equity in a $200 million round of funding in 2010, taking a combined 25% stake in the company. Coffee Day also has interests in real estate, logistics and wealth management.

A number of private equity firms are seeking exposure to India's food and beverage sector, notably fast-food and mid-range restaurants.

Notable transactions last year included ICICI Venture buying a 10% stake in Devyani International, which has franchise rights for Pizza Hut, KFC and Costa Coffee; India Equity Partners investing $35 million in Sagar Ratna, a local specialty restaurant chain; and Beacon India Private Equity committing INR80 million to Impresario Entertainment and Hospitality, which operates fine dining restaurants Mocha and Smoke House Deli.

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• Topics
• South Asia
• Consumer
• Expansion
• India
• Consumer
• NSR New Silk Route Partners
• Growth capital