Mumbai: In yet another attempt to sell out, Mumbai-based BJN Group that owns the Firangi Paani and Sahib Sindh Sultan chains of restaurants, is in talks with two buyers, two people with direct knowledge of the mater said.
Mumbai-based investment bank o3 Capital Advisory Pvt. Ltd has got the mandate to find a buyer. “The promoters are expecting valuations of around Rs 80-100 crore,” one of the persons said. This is much lower than what it was expecting last year.
Firangi Paani restaurant at Bandra Link road, Mumbai. File photo.
After its founder P.B. Nichani’s death last year, the promoters started scouting for a buyer.
The group, which has brands like Indijoe, Café Masala, Hypnos and Aromas of China, was in talks to sell its entire stake for Rs 250-300 crore last year, but the deal could not be closed due to a valuation mismatch.
Nisha Nichani, chairperson and managing director of the BJN Group, confirmed that it is in talks with investors, including hotelier Prashant Shetty, and is looking at closing the deal as soon as possible. “Currently, legal due diligence is on,” she said.
“The promoters are looking to exit and want a buyer who would expand the Firangi Paani and other restaurant chains,” she added. According to Nichani, investors are citing a valuation of anywhere between Rs 50 crore and Rs 300 crore.
“We are in touch with two-three equity players, however, no commercial transaction has been finalized and negotiations are still on,” Mamta Bhatt, director of BJN, said in an email response to Mint queries.
The 13-year-old BJN Group operates at least 42 restaurants and 23 brands in Bangalore, Hyderabad, Jaipur, Gurgaon, Mumbai and Pune, and a boutique hotel in Bangalore.
Deepesh Garg, managing director of o3 Capital, declined to divulge details. “Talks are on,” he said, adding that several casual and fine-dining restaurant chains, including the BJN Group, were expanding and may need capital.
Private equity firms have an appetite for restaurant chains and have invested $110.53 million (Rs 543 crore) in five restaurant chains this year, according to VCCEdge, which tracks venture capital and PE activity in the country, against a $13.18 million investment in two firms in 2010.
Investors tend to like high-growth sectors, and restaurants fall in that category, said Rajesh Srivastava, chairman and managing director, Rabo Equity Advisors Pvt. Ltd, the country’s first agriculture and food sector-focused PE fund. “There is a very high opportunity available to scale these businesses. There are many chains, but they are small, mostly city-centric. There is an opportunity present to build pan-India chains,” he said. Rabo is currently considering investing in two such restaurant chains, Srivastava said.
While high margins in restaurant chains attract investors, managing these businesses remains a challenge, said Debashish Mukherjee, a partner and vice-president at AT Kearney India, a consultancy. “While high margins can be an initial attraction, these businesses can run into troubles like food wastage, quality concerns, inventory mismanagement and supply chain issues.”