Private equity firms are warming up to Indian restaurants. The Dodsal group, one of the two largest franchisees of Yum! Brands-owned Pizza Hut and KFC, is in advanced talks with private equity firm New Silk Route (NSR) to sell 30-40% stake in the company.
The deal could be anywhere between Rs 300 crore and Rs 500 crore, an industry source said. This deal comes on the back of a similar PE fund infusion in the other large franchisee of Yum! Brands, Ravi Jaipuria-owned Devyani International, which has the franchisee rights for Pizza Hut and KFC for the North and East with 65 Pizza Hut and 7 KFC outlets in the country.
Mumbai-based Dodsal owns the franchisee rights for Pizza Hut in south and west India. It also owns KFC restaurants in the key markets of Mumbai and Bangalore. Dodsal Corporation operates 62 Pizza Hut and KFC outlets spread across 11 cities in India. It is among the largest operators of quick-service restaurants and one of KFC’s biggest franchisees in India.
Anticipating a further boom in the domestic consumption story, a number of private equity deals have been sealed in the restaurant space in India. This includes SAIF Partners picking 20% in Mainland China for Rs 90 crore, Navis Capital acquiring Nirula’s and blank cheque firm IHC acquiring Mars Restaurants and SkyGourmet Catering.
According to a source, the Dodsal group wants to exit the restaurant franchisee business to focus on its other businesses, which include infrastructure development, engineering and construction, and chemicals and petrochemicals. Yum! Brands MD Niren Chaudhary said: “The Dodsal group is looking at various strategic investors for infusion of funds.
No deal has been sealed so far.” An e-mail query sent to the Dodsal group chief Rajen Kilachand went unanswered. NSR, the PE firm negotiating for a stake in Dodsal was co-fouded by former McKinsey chief Rajat Gupta, ex-DSP Merrill Lynch head Amit Chandra and ace venture capitalist Parag Saxena (one of the early investors in Starbucks). Recently, Amit Chandra quit NSR to head Bain Capital in India. Some of the existing investments of NSR in India include Aster Infrastructure and Reliance Telecom Infrastructure, besides INX Media.
Source: Economic Times