Sagar Ratna founder buys out India Equity Partners

Banan told the Press Trust of India that he bought IEP’s 77% stake in order to pursue his expansion plans for the company in preparation for a planned IPO in five years. Financial details of the transaction were not disclosed. IEP paid INR1.8 billion (then $40.2 million) for the chain in 2011.

Sagar Ratna launched its first restaurant in 1986 in Defence Colony, an upscale area of Delhi famous for its high-quality restaurants. It now operates 88 locations, over 50 of them franchise-operated, which specialize in South Indian and vegetarian cuisine. The company plans to open 100 more branches, both franchised and company-owned, over the next three years.

IEP’s ownership of Sagar Ratna has been marked by conflict between the New York-based PE fund and Banan over corporate governance and quality issues. The firm had invested in order to refurbish the 70 branches the company operated at the time and to open 200 more locations within four years. However, after six years little progress has been made on those plans. IEP reportedly put Sagar Ratna up for sale last year, but found few takers at the desired price.

IEP closed its first fund in 2006 at $353 million to invest in consumer products and services, financial services, infrastructure and medical companies in India. However, several of its investments in the country have run into trouble and AVCJ Research shows no investments by the firm since 2011. The firm pursued legal action against logistics firm Fourcee Infrastructure Equipment alongside General Atlantic in 2013, alleging “extensive forgery and willful deceit” on the part of company executives.

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• Topics
• South Asia
• Consumer
• Buyback
• India
• Exit
• India Equity Partners