SCPE thirsty for $32m Indian bottler deal

SCPE, whose latest cash injection follows the purchase of a reported 5% stake in the firm for INR2.5 billion ($48 million) in July 2011, expects that increasing consumption to drive growth of 20-30% for the next several years in the soft drinks industry.

As the largest bottler for PepsiCo in South Asia, VBIL is engaged in bottling, distributing and marketing beverages sold under trademarks owned by PepsiCo.

"The industry is characterized by two global players, and as Pepsi's largest franchisee in South Asia, VBIL was the best platform to capitalize on the industry opportunity," NaineshJaisingh, global co-head for SCPE, tells AVCJ."The company enjoys tremendous confidence from Pepsi which has helped VBIL expand into North Africa as well."

SCPE was persuaded to re-invest in the firm by its faith in the chairman, Ravi Jaipuria, who it perceives as an "extremely dynamic" entrepreneur who has proved himself capable of attracting and retaining anexperienced management team. It received legal advice from WadiaGhandy on the deal, while PricewaterhouseCoopers was the financial and tax adviser.

The new capital will principally be used to acquire Pepsi's 26% stake in VBIL's subsidiary, Varun Beverages. The latter unit will then be consolidated into its parent. Funds will also be put towards boosting bottling plant capacity and expanding operations further into Africa and other parts of Asia. UdaiDhawan, managing director of SCPE India, led the deal and continues to serve on the VBIL board.

VBIL is owned by R.J. Corp, which comprises diversified business interests spanning beverages, fast food restaurants, dairy products, breweries, education, healthcare and hospitality.

SCPE's previous investment in the company was prompted by synergies between the markets in which VBIL wants to expand and the market in which SCPE's parent, Standard Chartered Bank, already operates. VBIL was already a client of the bank. "It allowed us an opportunity to add meaningful value to the business," says Jaisingh of the 2011 deal, which aimed to support the company's expansion in India as well as in Morocco, Nepal and Sri Lanka.

The PepsiCo franchisee was last year tipped to be planning an IPO for 2014. However, SCPE now says that the company will concentrate on streamlining its corporate structure, gaining significant scale and making a number of acquisitions before accessing the public markets.

"As and when there are organic or inorganic opportunities that necessitate the company to raise capital, we may consider providing funding at that time," says Jaisingh.

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• Topics
• Expansion
• South Asia
• Consumer
• Standard Chartered Private Equity
• India
• Consumer
• Growth capital