New York-headquartered private equity firm General Atlantic is cooking a spicy deal and plans to give a fresh desi twist to its consumer food portfolio in India. The bulge bracket fund is in talks to acquire iconic Mumbai-based spice maker Badshah Masala, through its investee company Capital Foods, the owner of the popular "Chings Secret" brand of instant noodles and sauces, sources with knowledge of the matter told Moneycontrol.
"The deal is in an advanced stage of negotiations and the signing of agreements and an official announcement is likely this month. The Badshah Masala brand is owned by Jhaveri Industries and the promoters, the Jhaveri family, are looking to sell a controlling stake of 76 percent in the company to Capital Foods," a source told Moneycontrol.
" The plan is for Hemant Jhaveri to make a complete exit by selling his entire 55 percent stake in the company. His cousin brother Kailash Jhaveri holds the remaining 45 percent stake and is set to make a partial exit by selling 21 percent stake," added another source.
"Badshah Masala is one of the oldest spice brands in the country and has a massive network of points of sales. General Atlantic wants Capital Foods to expand aggressively into newer, additional segments of food ingredients," added a third source.
Moneycontrol could not independently verify the value of the proposed transaction.
Jhaveri Industries had revenues of around Rs 350-400 crores for FY19, as per reports.
It sells 48 varieties of blended spices and ground spices ranging from red chilli powder to curry masala and has a manufacturing unit at Umbergaon, Gujarat. Exports to countries like USA, United Arab Emirates, Tanzania and Singapore account for a third of the firm's sales.
Badshah Masala’s catchy jingle from the 90’s “ Swaadh Sugandh Ka Raja, Badshah Masala” made the brand a household name. The jingle was also used later on the Mumbai Western Railways suburban train network as part of a campaign. It competes with brands like Everest, MDH, Catch, Mothers Recipe, Priya and others in the Indian market.
Ajay Gupta is the Managing Director of Capital Foods, and General Atlantic invested in the packaged foods company in mid-2018. Its popular Indo-Chinese "Chings Secret" brand also offers instant soups, chutneys and masalas. Capital Foods also owns the "Smith & Jones" brand of cooking pastes, pasta masala and pizza ketchup.
In the consumer segment in India, General Atlantic has also invested in supermarket chain D-Mart, casual dining restaurant chain 'Absolute Barbecue' and maker of women's apparel and accessories 'House of Anita Dongre'. It has over $35 billion assets under management (AUM) and has been present in India since 2002. According to its website, other companies in its Indian portfolio include PNB Housing Finance, IIFL Wealth and Asset Management, Hexaware, Byju's and Jubilant Lifesciences amongst others.“The overall food market in India is growing annually at a rate of over 12 percent. It was worth $200 bn in 2016-17 and is expected to cross $540 bn by 2020. A new market for products such as breakfast cereals, pasta, infant food, bakery products, foreign liquor and different types of oils and sauces is driving the growth,” says Anil Talreja, Partner, Deloitte India.
According to the 2017-18 annual report of the Spices Board India, Ministry of Commerce & Industry, the export of Indian spices continued its increasing trend and achieved an all-time record in both volume and value.
“A total of 10,28,060 tonnes of spices and spice products valued at `17929.55 crores was exported from the country as against 9,47,790 tonnes valued at Rs 17,664.61 crores in 2016-17, registering an increase of 8 percent in volume,” the report said.
In response to an email query from Moneycontrol, General Atlantic declined to comment. Moneycontrol is awaiting an email response from Capital Foods & Jhaveri Industries and has sent multiple reminders and will update this article as soon as it hears from them.