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Restaurant chain BJN Group seeks PE route to sell stake

Restaurant chain BJN Group seeks PE route to sell stake
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First Published: Thu, Nov 04 2010. 11 54 PM IST
Updated: Thu, Nov 04 2010. 11 54 PM IST
Bangalore: The BJN Group that owns the Firangi Paani and Sahib Sindh Sultan restaurants is on the hunt for a buyer after its founder-promoter P.B. Nichani died last year, leaving behind a wife and two teenage children.
The restaurant chain, with a host of other brands such as Indijoe, Cafe Masala, Hypnos and Aromas of China, is in advanced talks with private equity (PE) investors to sell all its stake for Rs 250-300 crore, said two people familiar with the matter.
“The company, like any other retail business, needs capital and the family does not have it,” said one of them, a senior executive at the Indian arm of a global fund that considered the deal, but pulled out a few weeks ago over valuations.
The 12-year-old BJN Group operates 42 restaurants and 23 brands in Bangalore, Hyderabad, Jaipur, New Delhi, Gurgaon, Pune and Mumbai.
Its formats range from Angeethi’s traditional Punjabi food to North-West Frontier cuisine and English pub ambience. It has a turnover of around Rs 100 crore, according to Babita Jayaram, vice-president, BJN Group. She did not comment on the deal.
The group’s growth came to a standstill when Nichani, at 46, died. His wife Nisha Nichani has inherited the business, but has little experience in running the chain.
Nichani’s nephew Manoj Nichani, who has been with the company since its early days, continues as a director. He did not reply to emails sent late October.
A spokeswoman for the group, in response to an email sent on 27 October, said the company’s directors were travelling and could not be reached.
According to the two people mentioned at the beginning of the story, who asked not to be named, India Equity Partners (IEP) is close to signing a stake purchase deal with BJN Group. Bangalore-based investment bank o3 Capital Advisory Pvt. Ltd is running the mandate for the deal, they said.
Gaurav Mathur, IEP’s managing director, said in a text message that he had “no comments on any deals which our firm may be looking at”.
IEP is a $350 million (Rs 1,550.5 crore) India-focused private equity fund that has invested in Bharti Infratel Ltd, the telecom infrastructure subsidiary of Bharti Airtel Ltd, port management firm Ocean Sparkle Ltd, and auto components maker Amtek India Ltd.
Mathur has previously said in media interviews that IEP is open to buyouts.
Deepesh Garg, managing director at o3 Capital, who also leads its consumer services practice, declined to comment on the deal. But he said several casual and fine-dining restaurant chains, including BJN group, were expanding and may need capital.
Several other restaurant chains are seeking institutional capital as well.
Little Italy Express Foods Pvt. Ltd, the restaurant chain that serves vegetarian Italian cuisine, also wants to raise money from private equity firms to fund its expansion.
“Yes, we are open to the PE route,” chief executive Purandar Chaudhuri said in an email.
Some “PE firms have shown interest in investing in our business. We would like to double our total number of outlets over (the) next two to three years”.
Little Italy operates 26 outlets in 17 cities in India. In October, the company said it was open to diluting a 20% stake.
Another restaurant operator that runs Mainland China, Oh! Calcutta, Machan and Flame and Grill wants to dilute a 30% stake to fund its expansion.
Anjan Chatterjee, managing director of Speciality Restaurants Pvt. Ltd, told reporters at a press conference earlier this year that his company planned to expand its flagship brand Mainland China to 100 outlets from 32 now, investing Rs 150 crore.
In 2008, the company raised $20 million from private equity firm Saif Partners Ltd, selling a 20% stake.
Experts say post the downturn, PEs are diverting their attention to consumer-driven businesses and restaurant chains are high on their cards.
PE investors are looking to invest in fine-dining chains that are established in one or two states, said Vikram Utamsingh, executive director of audit and consulting firm KPMG India.
“We have seen companies like Nirula’s getting acquired by PE firms. Though it’s a sector of interest, unless it is a reasonable, established business and with good prospects, they (investors) would not be interested.”
Malaysia-based private equity fund Navis Capital Partners had acquired Nirula’s, one of India’s oldest fast food chain, for an undisclosed sum in 2006.
deepti.c@livemint.com
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First Published: Thu, Nov 04 2010. 11 54 PM IST