New Silk Route Partners in talks to sell Moshe’s Fine Foods stake3 min read . Updated: 30 May 2016, 08:16 AM IST
NSR, which acquired a majority stake in Moshe's in 2013, has been in talks with many buyers in the last six months
Mumbai: New Silk Route Partners LLC (NSR), an Asia-focused private equity (PE) firm, is planning to sell its food and beverages portfolio company, Moshe’s Fine Foods Pvt. Ltd, to a strategic buyer. The fund has been in talks with several buyers in the last six months, two persons familiar with the development said.
NSR acquired a majority stake in Moshe’s in September 2013. As per registrar of companies (RoC) data, NSR’s holding in Moshe is 58% as on 31 March 2015. The remaining stake is held by its founder Moshe Shek, an Indian entrepreneur. The company runs a chain of restaurants and cafes that specialize in Mediterranean cuisine under the brand name Cafe Moshe’s.
Moshe’s Fine Foods started operations in 2004 when it opened its first outlet at Cuffe Parade, Mumbai.
Today, it runs 14 outlets across Mumbai and Pune under Cafe Moshe brand.
“NSR have been discussing with several investment bankers for offering a sell mandate but nothing has been signed yet. The enterprise value of Moshe’s could be ranged from ₹ 75- ₹ 100 crore," said the first person quoted above.
Moshe’s reported a revenue of ₹ 22.7 crore in 2014-15, up from ₹ 20.9 crore in the previous financial year, data from the company’s filings with the RoC shows.
In 2014-15, Moshe’s loss stood at ₹ 6.57 crore, almost double the loss reported in the previous year at ₹ 3.32 crore. The company has continually reported losses since 2012-13, when it reported a loss of ₹ 57 lakh.
“It could be tough to find a buyer for Moshe’s in the backdrop of declining performance of the chain. NSR has not pumped any money for the expansions and not bothered about scaling up the business," said the second person.
When contacted, an NSR spokesperson declined to comment. Interestingly, Moshe’s is NSR’s last investment in India—it has NSR not made any new investments since 2014.
Besides Moshe’s, NSR’s other portfolios in the food and beverage (F&B) segment in India are Bengaluru-based Vasudev Adiga’s Fast Food Ltd and Coffee Day Resorts Pvt. Ltd. NSR which acquired a significant minority stake in Adiga’s in 2012 got into a dispute with the company’s promoter K.N.Vasudeva Adiga, who had approached the Company Law Board, which appointed an administrator last year to run the food chains.
NSR, a $1.4-billion PE fund co-founded by Parag Saxena with former McKinsey chief Rajat Gupta and Raj Rajaratnam in 2006, has invested more than $1 billion in India across 17 portfolio companies. Presently, NSR is in the process of exiting a large number of portfolios before planning to launch its second fund.
Last year, NSR made a few partial exits after three of its portfolios got listed—Coffee Day, VRL Logistics Ltd and Ortel Communications Ltd. NSR also exited from Augere Wireless Broadband India and PNB Housing Finance.
NSR is among several India-focused PE funds that are in process of selling their restaurant chains.
PE firm Everstone Group is looking to sell its fine-dining business platform Pan India Foods Solutions Pvt. Ltd, also known as Blue Foods, Mint reported on 6 May. Like Moshe’s, Pan India Foods’ loss has doubled to ₹ 38.8 crore in 2014-15 from ₹ 19.8 crore in 2011-12, according to RoC data.
“There are several casual dining restaurants (CDR), such as Barbeque Nation, Mama Goto, Olive, etc., that have PE investors that have done well while there are others that have appeared to struggle. The ones that have not worked out well may be a challenge from an exit perspective and certainly from a returns perspective for the PE funds. But in times to come, this sector will see significant growth as Indians spend more on eating out and as restaurateurs mature," said Siddharth Bafna, partner & head, Corporate Finance at Lodha & Co., the Mumbai-based boutique investment bank.
“There will also be some consolidation in times to come to build more powerful platforms that will demonstrate scale through a multi-brand approach, making exits possible for investors," Bafna added.
The Indian food and beverage industry will expand at an average annual pace of 24% to reach ₹ 3.8 trillion in sales by the year ending 31 March 2017, said a May 2015 report by consulting firm Grant Thornton India and Federation of Indian Chambers of Commerce and Industry (Ficci).
Casual dining, with a 32% share, will expand 10.1% annually, while fast-food joints, which have the largest market share at 45%, will grow by 16.6% a year, it said. Indians spend about half of their total consumption expenditure on food, which continues to rise among people aged 20-25, said the report.