Everstone buys Hindustan Unilever's bakery business

The transaction includes the transfer of the Modern brand, which has been part of Hindustan Unilever's packaged foods division since its acquisition in 2000 through a government privatization program. The seller announced in a regulatory filing that the deal falls under a wider strategy to exit non-core businesses.

It also said in a response to a query from LiveMint that the Modern bakery unit is profitable and generates annual turnover of around INR2.5 billion ($37.6 million). It has six manufacturing facilities and a network of franchises nationwide, producing a range of breads and other bakery products.

"Having turned around the business and built a sustainable growth model, we believe that the sale to Everstone will unlock the full potential of the Modern brand," Sanjiv Mehta, CEO and managing director of Hindustan Unilever said in a statement.

Hindustan Unilever has more than 35 brands across 20 different consumer products categories. The company reported net revenue of INR308 billion for the 2015 financial year, up from INR280 billion for the previous 12 months, while net profit rose to INR43 billion from INR38 billion. The packaged foods division accounted for 6.2% of total revenue.

"Despite low growth in bread industry due to challenges posed by other breakfast options and low entry rate in the segment, Modern Foods managed to maintain leadership position in most of the markets," the company said in its most recent annual report, noting the division's swift product innovation and strong distribution system.

Everstone has over $3 billion in assets under management and has been raising its third private equity fund, which has a target size of $650 million. It backs businesses with operations on the Indian sub-continent as well as those further afield that benefit from Indian domestic consumption and infrastructure development.

The private equity firm has set up two holding companies for its food and beverage assets. Pan India Food Solutions owns several domestic restaurant chains, while F&B Asia includes the Burger King India franchise, the Harry's bar chain, and Domino's Pizza in Indonesia.

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• Topics
• Consumer
• South Asia
• Buyouts
• buyout
• Everstone Capital
• India
• Consumer