Mumbai: The $2 billion India-focused asset manager WestBridge Capital is engaged in serious discussions to buy controlling shares in the southern confectioneries and restaurant chain Adyar Ananda Bhavan, also known as A2B, valuing it at about Rs 1,800 crore, people with direct knowledge of the matter said. The investor has signed an exclusivity for due diligence at one of the largest restaurant groups before making a binding offer, it is learnt.
WestBridge has identified a senior management team to run the company, if the largest deal in the Indian restaurant sector goes through.
Two of founder KS Thirupathi Raja’s siblings run the Chennai-headquartered A2B which began life as a sweets and savouries retailer. One of them is likely to exit the company, giving WestBridge the route to buy 51% or more in the company, people privy to the matter told TOI. However, the fate of the deal hinges on the outcome of the due diligence.
When contacted, WestBridge Capital’s co-founder & MD, Sandeep Singhal, did not offer any comments. “We will speak once there is a deal. Nothing has been decided right now,” said
The interest in A2B signals WestBridge’s ‘transitioning’ to explore buyout deals in the private markets. The fund co-founded by K P Balaraj, Sumir Chadha, SK Jain and Singhal has been a prolific public markets backer riding the early wave of foreign investor appetite in the Indian mid and small cap companies. It mopped up stellar returns from electrical equipments maker Havells and tile maker Kajaria ceramics among others, and has built up positions in biscuit maker DFM Foods and tyre producer CEAT in the recent past.
A2B’s revenue and ebitda are estimated at around Rs 670 crore and about Rs 110 crore respectively. WestBridge’s offer details will be firmed up only after the due diligence, though the restaurant chain has an asking valuation pegged between Rs 1600 to Rs 1800 crore. Deloitte is advising the company on the share sale, while KPMG is said to be advising WestBridge on the diligence work.
TOI reported last November about A2B initiating discussions with multiple private equity investors to raise funds through a share sale. Samara Capital, Carlyle Group, CX Partners were among those who looked at acquiring the company, while KKR & Co explored a structured financing deal.
Another large India-dedicated investor Everstone Capital has a portfolio of fining dining restaurants in which it has tried offloading shares. In context, the sectoral observers said WestBridge’s interest in A2B was significant. An eventual deal, if it happens, could revive investor sentiments around one of the largest consumption themes in Asia’s third largest economy.
