Navis may exit Nirula’s a year into the purchase

Navis may exit Nirula’s a year into the purchase

New Delhi: The Delhi-based restaurant chain Nirula’s said it is in talks with India Hospitality Corp. (IHC) to sell as much as its 100% stake, barely a year after the hotel chain was sold by the founders to its current owner Navis Capital Partners, to book gains from the purchase.

The Malaysian private equity fund, Navis, is looking at two options: selling out fully or selling a stake.

“We could either sell out completely or we might decide to sell a percentage of the shareholding. Nothing is finalized yet," Samir Kuckreja, chief executive officer and managing director of Nirula’s and a minority shareholder in the company said. “But we are in talks with IHC."

If Navis decides to sell its entire stake, the company will be given an option by IHC to buy 20% stake in it after it acquires Nirula’s. If this happens, Navis will continue to hold a stake in Nirula’s even after the sale, through its shareholding in IHC, which is listed on London’s Alternative Investment Market (AIM), an exchange for smaller firms.

“If the stake sale happens, then Navis would be able to trade its shares in IHC at AIM," Kuckreja said. “Booking the profits made from the increased valuation of Nirula’s is partly a reason for selling."

Navis has previously bought restaurants in India, only to sell them shortly afterwards.

It sold its holdings in Mumbai-based Mars Restaurants and affiliated airline catering company SkyGourmet Catering to IHC for $110 million (Rs445.5 crore). The company expects to close a deal on Nirula’s with IHC in six to eight months.

The buyer is a special purpose acquisition corporation promoted by two US-based entrepreneurs to acquire Indian businesses in the hospitality and related industries. The acquiring firm recently raised $100 million on AIM to invest in India’s hospitality business. IHC declined comment on the deal.

“Navis will have an option to make a fresh investment in IHC to acquire 20% stake. They may or may not exercise this option," Kuckreja said. After the sale, while the management control will rest with IHC, it might allow the current management team to remain on the board of directors.

Nirula’s changed hands in June last year when the original promoters, Lalit and Deepak Nirula, sold the chain to Navis and Kuckreja. The Nirula family started the chain of restaurants and ice-cream parlours in Delhi’s central business district in the 1950s, serving popular Western fare from hot chocolate fudge to burgers.

At the time of the purchase, Navis said it planned to invest Rs100 crore to expand Nirula’s footprint across the country. The company planned to have a national presence by opening 150 new restaurants over three years. Currently, it has 50 restaurants across India.