Harvest Gold looks to raise $50-60 million

New Delhi: Delhi-based baker Harvest Gold Industries Ltd is holding discussions with private equity firms and strategic investors, including Modern brand, which is owned by Everstone Capital-backed Nimman Foods Pvt Ltd, to raise money, two people familiar with the development said.

“The bread and bakery firm is looking to raise somewhere between $50-60 million from investors in lieu of an equity stake,” one of the people close to the discussion said, requesting anonymity.

Harvest Gold’s spokesperson said, “Investors are approaching Harvest Gold since last several years. But nothing has materialised yet.”

Everstone Capital declined to comment.

Everstone sealed a deal to acquire the bread and bakery business of Hindustan Unilever (HUL) under the brand name ‘Modern’ last year. The size of the deal was not disclosed, but Modern’s revenue was around Rs250 crore.

The deal was completed in April this year.

HUL had acquired a stake of 74% in Modern Foods in January 2000 when the government sold its holding. Two years later, it bought the remaining stake.

Modern’s portfolio, apart from bread, includes value-added bakery products like buns, cakes and muffins, which are manufactured at Modern’s six plants.

Pune-based market research company ValueNotes, which provides strategic and competitive intelligence, said in a report that “the bread industry in India, valued at Rs33bn (~USD 0.53 bn) in FY 2015(E), grew at a CAGR of ~9% over the last three years. The industry will be worth approximately Rs53bn (~USD 0.86bn) by FY 2020, growing at a CAGR of ~10%.”

“Companies manufacturing bread products are likely to increase their manufacturing capacities to expand their foothold in different regions,” it added.

“With a change in eating habits and preferences of consumers, the bread industry is coming up with innovative products and flavors, and a variety of breads,” it said.

Harvest Gold was founded in 1993 by Adil Hassan as Harvest Gold Foods India Pvt Ltd in a market dominated by Britannia and Modern bread.

Hassan, a chemical engineer from IIT Delhi, switched to making bread with an investment of Rs10 million. The company started production in June 1993, at its state-of-the-art facility at Bhiwadi, Rajasthan (installed capacity: 75,000 loaves of 800g each a day) with a premium range of Harvest Gold white bread in 400g and 800g packs.

Everstone is a private equity player primarily focused on the branded eating-out space. During the past few years, it has made several investments in food and beverage firms, including Burger King India, Pan India Food Solutions Pvt. Ltd (Blue Foods), Capital Foods Ltd and Sula Vineyards. Everstone group has over $3 billion in assets under management.