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French Bakery in talks with PE firms to raise first external funding


New Delhi-based French Bakery Pvt. Ltd is engaged in talks with several investors, including some private equity firms, to raise its first external funding to enhance its retail presence, a top company executive told VCCircle.

The firm, which owns and operates bakery chain L’Opera, sells pastries and cakes and has 14 outlets in NCR. The company started off with a small outlet at the French Embassy in Delhi.

After the fundraise, the company plans to open two more outlets in January—one in Dehradun and the other at Indira Gandhi International Airport in Delhi.

The company is in talks with Everstone Capital, ChrysCapital and Rabo Private Equity to raise around $8 million (over Rs 50 crore) by diluting around 20% stake, according to two persons familiar with the development.

An email query sent to ChrysCapital did not elicit any response immediately. Rabo PE said it does not comment on specific companies with regard to deal prospects. Everstone declined to comment.

Kazem Samandari, chairman of French Bakery, said the talks are at an advanced stage and the round will close in January. He, however, declined to confirm the names of the potential investors, saying talks are confidential.

Shiv Dayal, founder and managing director of Langham Capital, said the firm is in talks with venture capital, private equity and family office investors, particularly those that have experience of investing in restaurant and food service businesses.

“French Bakery is a category leader in high-end bakery products and the equity funding will be used to create a retail presence in markets such as Mumbai, Pune, Chennai and Bengaluru as well as for marketing expenses and brand building,” Dayal said.

According to a previous report by The Hindu BusinessLine, the company was looking to raise Rs 40-50 crore. The report, however, did not mention the names of possible investors.

Samandari said the company is also exploring expansion into overseas markets such as Sri Lanka and Indonesia.

He said the company would invest in expansion more than what it plans to raise. “We will invest from the surplus we have generated from the business,” he said. The firm aims to close the current financial year with revenues of Rs 16-18 crore, according to him.

Deals in the space
Of late, the online food delivery space has elicited significant traction among investors. However, many well-funded firms either got shut or were sold.

In the offline bakery space, Mumbai-based Theobroma Foods Pvt. Ltd, is in talks with private equity investors for a Series A round of funding to finance expansion plans, said a report by Mint in September.

Everstone has already backed fine- and casual-dining firm Massive Restaurants Pvt. Ltd that is actively looking for acquisition opportunities to expand its business.

In 2015, fine-dining restaurant chain Speciality Restaurants Ltd sold the stake back to the founder promoters of the Mumbai-based small bakery chain Love Sugar Dough, barely four months after acquiring a majority stake in the company.

In 2014, Future Consumer Enterprise Ltd, the food and FMCG arm of Kishore Biyani-led Future Group, acquired a 35% stake in Mumbai-based Sarjena Foods Pvt. Ltd. Sarjena Foods is manufacturing and distributing branded bakery products under the brand Baker Street.

Source: VCCircle

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