14 July 2016
India’s largest organic food products maker Sresta Natural Bioproducts Pvt. Ltd has hired global advisory firm Alvarez and Marsal to find a buyer, a person familiar with the development said.
The Hyderabad-based firm, which sells the 24 Mantra brand of rice, pulses and oil among others, is in early talks with private equity funds and a deal is likely at ₹ 600-650 crore ($100 million), this person said, asking not to be identified.
A second person confirmed the development, adding private equity funds Peepul Capital LLC and Ventureast will sell their stakes and the promoters will dilute their holding. He, too, requested not to be identified. The individual shareholding of PE investors is not known.
“As the deal is in the range of $100 million, several large private equity funds have evinced interest in a buyout," the first person said.
Mails sent on Monday to Rajashekar Reddy Seelam, founder and managing director, Sresta, a company spokesperson, Alvarez and Marsal as well as spokespersons at Ventureast and Peepul Capital went unanswered.
According to Euromonitor International, Sresta leads India’s organic food industry with a 62.6% share, followed by Organic India Pvt. Ltd with a 9.4% share as a distant No.2. The organic products market in India has grown from ₹ 160 crore in 2010 to ₹ 550 crore in 2016, according to market researcher Euromonitor International.
After working with south India-based Murugappa Group, Reddy, an IIM-Ahmedabad graduate launched his organic food business in 2004. According to the company website, Reddy decided to expand his business across India and abroad, realizing problems with excessive and harmful usage of pesticides.
In the first round of funding, Sresta raised $1 million from Biotechnology Venture Fund managed by Ventureast in 2006. In 2011, Peepul Capital, a Hyderabad-based private equity fund, invested about $15 million for an undisclosed stake. Peepul, an active investor in food sector, has investments in Innovative Foods Ltd, which owns the Sumeru brand in the frozen foods category and Maiyas processed food and beverages company in southern India.
Sresta sells over 200 products under the 24 Mantra Organic brand in the US, Canada, the UAE, Mauritius and the UK. The 24 Mantra brands include rice, wheat, dal, chana, flours, spices, spice powders, culinary pastes, snacks, breakfast cereals, juices and cookies. Its ready-to-eat products are marketed in 15 countries covering North America, Canada, Western Europe, and Australia. Sresta’s products are sold at all major retail chains such as Spencer’s, Food Bazaar, More, Niligiri’s and Godrej Nature’s Basket.
At present, 25,000 farmers cultivate organic foods for Sresta in 150,000 acres across 15 states. It plans to reach 500,000 acres under organic farming by 2020, the company website said.
Globally, the organic food market in 2015 was estimated to be worth $80-85 billion and growing at 15-16%. It is a small fraction of the overall food market, which is close to $4 trillion, says Pankaj Gupta, who heads the consumer and retail practice at Tata Strategic Management Group, a management consulting firm, while sharing that there are no precise estimates on the overall value of the Indian organic food market. The market is seeing renewed interest from investors and consumer packaged consumer firms. In July, French dairy firm Danone SA bought US organic foods producer WhiteWave Foods Co. for $10.4 billion as it looked at taking a slice of the fast-growing market for organic food. “This is a meaningful and large action that has made companies and investors take note of the space," said Gupta.
India’s largest organic food products maker Sresta Natural Bioproducts Pvt. Ltd has hired global advisory firm Alvarez and Marsal to find a buyer, a person familiar with the development said.
The Hyderabad-based firm, which sells the 24 Mantra brand of rice, pulses and oil among others, is in early talks with private equity funds and a deal is likely at ₹ 600-650 crore ($100 million), this person said, asking not to be identified.
A second person confirmed the development, adding private equity funds Peepul Capital LLC and Ventureast will sell their stakes and the promoters will dilute their holding. He, too, requested not to be identified. The individual shareholding of PE investors is not known.
“As the deal is in the range of $100 million, several large private equity funds have evinced interest in a buyout," the first person said.
Mails sent on Monday to Rajashekar Reddy Seelam, founder and managing director, Sresta, a company spokesperson, Alvarez and Marsal as well as spokespersons at Ventureast and Peepul Capital went unanswered.
According to Euromonitor International, Sresta leads India’s organic food industry with a 62.6% share, followed by Organic India Pvt. Ltd with a 9.4% share as a distant No.2. The organic products market in India has grown from ₹ 160 crore in 2010 to ₹ 550 crore in 2016, according to market researcher Euromonitor International.
After working with south India-based Murugappa Group, Reddy, an IIM-Ahmedabad graduate launched his organic food business in 2004. According to the company website, Reddy decided to expand his business across India and abroad, realizing problems with excessive and harmful usage of pesticides.
In the first round of funding, Sresta raised $1 million from Biotechnology Venture Fund managed by Ventureast in 2006. In 2011, Peepul Capital, a Hyderabad-based private equity fund, invested about $15 million for an undisclosed stake. Peepul, an active investor in food sector, has investments in Innovative Foods Ltd, which owns the Sumeru brand in the frozen foods category and Maiyas processed food and beverages company in southern India.
Sresta sells over 200 products under the 24 Mantra Organic brand in the US, Canada, the UAE, Mauritius and the UK. The 24 Mantra brands include rice, wheat, dal, chana, flours, spices, spice powders, culinary pastes, snacks, breakfast cereals, juices and cookies. Its ready-to-eat products are marketed in 15 countries covering North America, Canada, Western Europe, and Australia. Sresta’s products are sold at all major retail chains such as Spencer’s, Food Bazaar, More, Niligiri’s and Godrej Nature’s Basket.
At present, 25,000 farmers cultivate organic foods for Sresta in 150,000 acres across 15 states. It plans to reach 500,000 acres under organic farming by 2020, the company website said.
Globally, the organic food market in 2015 was estimated to be worth $80-85 billion and growing at 15-16%. It is a small fraction of the overall food market, which is close to $4 trillion, says Pankaj Gupta, who heads the consumer and retail practice at Tata Strategic Management Group, a management consulting firm, while sharing that there are no precise estimates on the overall value of the Indian organic food market. The market is seeing renewed interest from investors and consumer packaged consumer firms. In July, French dairy firm Danone SA bought US organic foods producer WhiteWave Foods Co. for $10.4 billion as it looked at taking a slice of the fast-growing market for organic food. “This is a meaningful and large action that has made companies and investors take note of the space," said Gupta.
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