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

The Economic Times - - Business Of Brands -

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


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.

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