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Varun Beverages raises stake in Zambia subsidiary

Pepsi bottler Varun Beverages chairman Ravi Jaipuria says stake increase in the Zambian arm is in line with the company’s emerging markets strategy


Ravi Jaipuria, chairman of Pepsi bottler Varun Beverages.
Ravi Jaipuria, chairman of Pepsi bottler Varun Beverages.

Mumbai: Varun Beverages Ltd, the world’s second- largest bottler of brands sold by PepsiCo Inc., has increased its stake in the company’s subsidiary Varun Beverages (Zambia) Ltd from 60% to 90%, it said in a filing to the stock exchanges.

The company did not disclose the financial terms of the transaction.

“...the stake increase in our Zambia subsidiary is in line with our philosophy of consolidating our presence in fast-growing emerging markets beyond India. We have recorded healthy volumes in our first year of operations and are highly profitable already with strong free cash flow generation,” Varun Beverages’chairman Ravi Jaipuria said in a statement.

In 2016, the company sold 10.7 million cases in Zambia.

“The operations are highly profitable and reported an Ebitda (earnings before interest, tax, depreciation and amortization) of Rs467 million in calendar year 2016. Given the growth prospects and promising earnings potential, the acquisition comes at a very reasonable valuation with an attractive payback,” the statement added.

Varun Beverages recently received approval to divest a 41% equity stake in Varun Beverages Mozambique, which it is exiting given its small scale of operations, and losses.

Varun Beverages is a unit of Jaipuria’s RJ Corp., which has business interests ranging from beverages and dairy products to fast-food restaurants and education.

In November, shares of Varun Beverages were listed on the stock exchange after the company raised a little over Rs1,100 crore through its initial public offering.

The firm produces and sells PepsiCo’s carbonated and non-carbonated soft-drink brands such as Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Tropicana Slice and Nimbooz, as well as packaged drinking water under the brand Aquafina. Globally, it’s the second largest bottler of PepsiCo. beverages, behind only Tingyi Cayman Islands Holdings Corp. of China.

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