Cookies, cakes & stakes: Theobroma may change hands
Summary
- ICICI Venture has decided to sell its entire 42% stake for around ₹1,200 crore, said two people aware of the development, while a third person said the chain’s founding family plans to exit as well
Promoters and investors of Theobroma Foods have begun talks with merchant bankers for a stake sale in the 20-year-old patisserie chain, people aware of the development said.
While two people said ICICI Venture has decided to sell its entire 42% stake for around ₹1,200 crore, a third person said the chain’s founding family plans to exit as well. The owners expect a valuation of around ₹2,800 crore for the company, the people said on condition of anonymity.
Theobroma Foods Pvt. Ltd was founded by former Oberoi Hotels pastry chef Kainaz Messman. Its first pastry store opened in Mumbai’s Colaba Causeway in 2004; for long, it operated as a single-outlet, family-run business.
ICICI Venture first bought a significant minority share in the food services company in 2017, committing about $20 million. The funds were allocated in two equal tranches, of which the first tranche was used to expand the brand to Delhi-NCR, and expand its presence in Mumbai and Pune. Theobroma has since grown to become a pan-India chain of patisseries with 194 stores.
The promoters and ICICI Venture have met several merchant bankers, but are yet to finalize one. A formal sale process is yet to be launched.
“The valuation is steep, but ICICI Venture is confident of getting around ₹1,200 crore for its 42% stake given the strong brand and business they have built," one of the two people cited above said on condition of anonymity, adding that the transaction may value Theobroma at over ₹2,800 crore.
However, according to the third person, a deal could take six to nine months to conclude. “The transaction is still some time away as the company’s FY24 financials are awaited. The process has entered exit mode, but they have not yet pressed the exit button," this person added.
The second person said other private equity firms may look to snap up ICICI Venture’s stake in the patisserie chain.
Spokespersons for both ICICI Venture and Theobroma did not comment.
Until the covid pandemic, Theobroma had about 50 outlets, primarily across Mumbai and Delhi; since then, it has opened shop in Pune, Hyderabad, Bengaluru, Chandigarh-Mohali, Chennai, Surat, Nashik, Jaipur and Nagpur as well. The company sells brownies, crackers, cookies, pastries and sandwiches.
According to industry estimates, India is the world’s ninth-largest food service market with a size of $51 billion in FY23. Over the past decade, the Indian food services market has grown at a compound annual growth rate of 9%. However, organized chains account for only 9% of this market. Among this, fast food chains account for 50%.
However, demand for restaurant-style food has seen an uptick helped by the proliferation of food aggregators as well as greater demand for such services in smaller markets, changing food consumption habits, favourable demographics and growing aspirations.
According to data sourced from business intelligence platform Tofler, Theobroma Foods reported a standalone net profit of ₹19.59 crore in FY23, against a net loss of ₹11 crore in FY22. Revenue from operations rose from ₹254.74 crore in FY22 to ₹351.67 crore in FY23.
ICICI Venture is the alternative investment arm of ICICI Bank. It has invested in over 60 companies across five PE Funds: India Advantage Fund Series 1, India Advantage Fund Series 2, India Advantage Fund Series 3,India Advantage Fund Series 4 and India Advantage Fund Series 5. Some of its other investments include Go Fashion India, Metropolis Health Services, Cello World and Bharat Biotech.
