Olive Bar & Kitchen Looks to Raise .` 200 cr for Expansion
Talks signal interest of PE investors in fine dining; in 2012, Aditya Birla PE invested $10 m in the company
Restaurant chain Olive Bar & Kitchen, in which Aditya Birla Private Equity fund is an investor, is looking to raise around .` 180.` 200 crore from other private equity investors to fuel its expansion plans, three people with direct knowledge of the development said. The deal signals the continued interest of PE investors in the fine dining and quick service restaurant chains. The restaurant chain initiated talks before the national poll results were announced and is currently in discussions with four to five PE funds, one of the three persons said. “The company has exhausted the money it raised from Aditya Birla PE and will need more capital for its future,” an investment banker with knowledge of the development said. In 2012, Aditya Birla Private Equity, part of the Aditya Birla Financial Services Group owned by billionaire Kumarmangalam Birla, invested around $10 million for a minority stake in Olive Bar & Kitchen, which owns the Olive, Monkey Bar, LAP, Ai and Soul Fry brands. In 2000, AD Singh started Olive Bar & Kitchen’s flagship chain of restaurant, Olive. The company owns a
SNEHA SHAH & MADHAV CHANCHANI
clutch of fine dining restaurants serving different set of customers, a night club and a catering business. Olive is present across Mumbai, Delhi and Bangalore.
“Aditya Birla PE will not exit through this second round of fund raise. The company needs capital to expand and hence this will be primary fund raise,” another person with direct knowledge of the development said. AD Singh, managing director of Olive Bar & Kitchen, did not respond to an emailed questionnaire, while Aditya Birla PE spokesperson declined to comment.
Olive Bar & Kitchen also has Centrum Capital promoter Chandir Gidwani and Manmohan Shetty, the owner of Adlabs Films and entertainment park Imagica, as investors.
The company had revenues of .` 38 crore in the financial year 2013 with profit after tax of .` 2 crore, according to credit rating agency CARE Ratings.
“The overall revenue stream is fairly diversified across not only various locations but also across various brands,” said the report released on April 2014. “However, its ability to successfully achieve better occupancy at both existing as well as new outlets and maintain its profitability margins shall be critical from a credit perspective.”
“Fine dining remains the smallest share in the overall market, but along with casual dining and quick service restaurants, the segment is growing faster,” said Saloni Nangia, president at Technopak, adding that profit margins are better in fine dining.
With an increase in disposable income levels and frequent dining out fast catching up among the middle class, the restaurant industry in In- dia 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 last year. Even as the number of PE deals increased from 23 in 2012 to 27 in 2013 in the food & agriculture sector, the amount invested dropped from $411 million to $247 million during the same period, according to data from EY, a consultant. But as private equity firms continue to chase the India consumption story, appetite for restaurant deals remains strong. “Over the years, there have been certain large investments in the restaurants and QSR sector,” said Nangia, president, Technopak. “If you see companies like Dominos owner Jubilant Foodworks and Mainland China’s Speciality Restaurants, they have fared well in the capital markets over the years.” PE funds such as Everstone Capital, SAIF Partners and New Silk Route are building dedicated platforms to make multiple investments in the sector.