Mainland China Owner Keen to Buy Stake in SK Restaurants
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.