Convergent Finance buys stake in Hindustan Foods
Convergent Finance, a private equity firm founded by former Fairfax India head Harsha Raghavan, has led a INR1.5 billion ($21.6 million) investment in contract consumer goods manufacturer Hindustan Foods.
The deal represents the first investment by Convergent, which Raghavan launched last year. Convergent and the other participants in the round, including Sixth Sense Ventures and Infinity Holdings, will be issued 2.8 million shares representing a 21% stake in Hindustan Foods, according to a filing. The price of the shares has not been directly disclosed, but appears to be around INR550, a significant premium to the February 27 closing price of INR351.
Founded in 1988, Hindustan Foods historically focused on manufacturing processed foods, but branched out into partnering with a wide range of consumer brands in 2013. Its portfolio includes cosmetics, personal care, and home products manufactured for global fast-moving consumer goods (FMCG) brands like Pepsico, Danone, Hush Puppies, and Esprit, as well as domestic FMCG players such as Hindustan Unilever.
For the year ended March 2018, the company reported INR1.3 billion in revenue, up from INR389 million the previous year. Net profit grew from INR6.7 million to INR62.8 million over the same period.
“We are most excited to have Convergent as our partner,” said Sameer Kothari, a managing director at Hindustan Foods, in a separate statement. “The Convergent team has deep expertise in adding value through M&A and bolt-on acquisitions, which is the need of the hour in the contract manufacturing sector. We will also benefit greatly by their global network of relationships, strategic insights and operational expertise.”
Raghavan helped launch Fairbridge Capital, the Indian subsidiary of Canada-based Fairfax, in 2010 and was involved in a number of high-profile transactions such as the 2012 acquisition of the Indian arm of Thomas Cook. He also served as a director at Fairfax India, the publicly-traded India investment unit of Fairfax that launched in 2014.
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