Rebel Foods Pvt. Ltd, which owns Faasos brand of internet kitchens, is looking to raise up to $150 million in fresh funding, said three people aware of the discussions, on the condition of anonymity.
Earlier this month, the company appointed Bank of America Merrill Lynch to advise on the fundraise and seek new investors, said one of the persons cited above. Investment giants including Japan’s SoftBank and Singapore’s Temasek Holdings have shown interest, the person said, adding Rebel is seeking to raise the funds at a valuation of $350-400 million.
SoftBank and Temasek declined to comment to Mint’s queries. Bank of America Merrill Lynch declined to comment
To be sure, these discussions are still at an early stage and may not materialize in a deal.
“The company has a lot of headroom for growth and is thus looking to expand. But it does not need the money immediately, and is on the road to become profitable this calendar year," said a second person cited above.
Rebel’s existing investors include Evolvence, a UAE-based private equity fund, Sistema Asia Ventures, Sequoia Capital and Lightbox Ventures.
“Rebel is a case study of a business that has understood the market, evolved its product to meet the customer needs and has created a business that is fundamentally changing the food service space. While we have believed in this potential for a long time, the proof of this can now be seen in the numbers and that is why there is an opportunity to consider a large fundraise without burning large sums of capital," said Sandeep Murthy, founder and managing partner at Lightbox Ventures, one of Rebel’s earliest backers, in response to Mint’s queries. Rebel plans to use the funds to expand its network of kitchens from the existing 200 to 500, and expand to Dubai and Indonesia, before expanding to other countries in South-East Asia. It also plans to invest in automation and robotics, which will help reduce manual labour in its kitchens, the second person added. Faasos rebranded its holding company to Rebel Foods in October last year, as Rebel owns and operates multiple brands, including biryani-maker Behrouz and pizza-maker Oven Story, among others.
According to the third person, Rebel will clock a revenue of about ₹500 crore in financial year 2018-19, and is trying to reduce losses in its bid to achieve profitability.
Food tech, a sector that was fading out a few years ago, bounced back with massive traction in the last two years led by delivery startup Swiggy, which raised a mammoth $1 billion in December, led by Naspers. Rival Zomato has been raising big rounds as well, and according to media reports is in talks to raise $500 million-$1 billion from a private equity investor in China.
Rebel competes with firms such as Lightspeed-backed Freshmenu, which prepares and delivers meals from its kitchens.
The cloud kitchen model is also seeing interest from retail incumbents such as Future Group, who said earlier this month that it would expand into cloud kitchens, using its digital wallet Future Pay to manage the food experience from end-to-end.