Main­land China Owner Keen to Buy Stake in SK Restaurants

The Economic Times - - Companies - SNEHA SHAH

Spe­cial­ity Restaurants, which runs chains such as Main­land China, Sigree and Oh! Cal­cutta, has be­gun talks to pur­chase a sig­nif­i­cant stake in celebrity chef San­jeev Kapoor’s SK Restaurants, three people with knowl­edge of the mat­ter said. SK Restaurants, pre­vi­ously known as In­dian Cook­ery, op­er­ates Khaz­ana, The Yel­low Chilli, Pin Yin, Sig­na­ture by San­jeev Kapoor and Sura Vie Lounge chains. “The en­ter­prise value of the com­pany is pegged be­tween .` 300 and .` 350 crore,” an in­vest­ment banker said. En­ter­prise value in­cludes eq­uity and debt, mi­nus cash on hand and cash equiv­a­lents. Kapoor launched In­dian Cook­ery four years ago by pool­ing in money from 25-30 in­vestors. Pro­mot­ers of health-club op­er­a­tor Tal­walkars and lo­cal pri­vate-eq­uity fund TVS Cap­i­tal hold sig­nif­i­cant mi­nor­ity stakes in the un­listed com­pany. “Ne­go­ti­a­tions are on with all the in­vestors. Since there are more num­ber of people to deal with, the trans­ac­tion is tak­ing time,” an- other in­vest­ment banker said. These in­vestors had on an aver­age put in around .` 1 crore when the com­pany was set up. “TVS Cap­i­tal will exit through this stake sale,” this per­son said.

A Spe­cial­ity spokesper­son said its chair­man and MD Anjan Chat­ter­jee was trav­el­ing and was un­avail­able to com­ment. Speak­ing on be­half of Kapoor, Anant Gawande, who is part of the Tal­walkars, de­nied any talks over sell­ing shares in the com­pany.

For Spe­cial­ity, ex­pand­ing into newer cat­e­gories and mar­kets across In­dia is the strat­egy go­ing for­ward, an­other per­son with knowl­edge of the de­vel­op­ment said. Spe­cial­ity op­er­ates 107 restaurants, in­clud­ing in In­dia, the Mid­dle East, Africa and the UK. The com­pany has a mar­ket cap of about .` 660 crore. Pri­vate-eq­uity in­vestors SAIF, Azim Premji In­vest and Glix Se­cu­ri­ties con­tinue to own stakes in the com­pany af­ter its ini­tial pub­lic of­fer in 2012.

With an in­crease in dis­pos­able

Chef San­jeev Kapoor’s chain seen val­ued at 300-350 cr

in­come lev­els and the cul­ture of din­ing out fast catch­ing up with the mid­dle class, the restau­rant in­dus­try in In­dia is ex­pected to grow at 17% an­nu­ally. The growth of the In­dian food ser­vice in­dus­try is broadly driven by con­sumers and food ser­vice oper­a­tors. The food mar­ket was es­ti­mated at .` 75,000 crore last year and would reach .` 1.37 lakh crore in 2015, ac­cord­ing to data re­leased at the In­dian Restau­rant Congress held in Au­gust. The growth prospects of quick­ser­vice restaurants have led to many pri­vate-eq­uity in­vest­ments in the seg­ment in the past five years. Some of these in­clude TVS Cap­i­tal buy­ing a stake in Om Pizza, which runs the Papa John’s pizza chain, as well as New Silk Route’s in­vest­ment in South In­dian chain Adi­gas Fast Food and its $75 mil­lion Cafe Cof­fee Day deal in 2010. Other deals in­clude Ever­stone Cap­i­tal’s $100-mil­lion in­vest­ment in Burger King and $20-mil­lion deal to ac­quire a 45% stake in JS Hos­pi­tal­ity Ser­vices; Se­quoia Cap­i­tal’s $5-mil­lion in­vest­ment in Pune-based Faaso’s.

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