IEP set to exit Sagar Ratna at huge loss

India Equity Partners likely to sell its stake for cr; its original investment in the co stood at

INDIA Equity Partners ( IEP) is in advanced talks to sell its entire stake in the popular south Indian restaurant chain Sagar Ratna back to the original promoters for close to R90 crore, sources familiar with the development told FE.

At this price, the sale would translate into a “fairly big” loss on the original investment of R180 crore, the sources added.

The deal, likely to conclude in a month's time, will end a longrunning feud between IEP and the Banan family led by Jayaram Banan who founded the chain in 1986 in Delhi.

IEP had, in 2011, picked up close to a 73% stake in the restaurant chain for R180 crore. However, things turned sour between the two after the PE fund refused to buy out the Banan family's remaining stake of 23% in the business, at the valuation sought. An emailsenttoSidKhanna,managing director, IEP did not elicit any response till the time of going to press.

Subsequently, the Banan family also offered to buy out IEP's stake but here too the valuation wasaboneof contention;sources said it was was significantly lower than IEP's expectations.

In August 2014, Jayaram Banan filed an FIR against the PE Fund's partners alleging cheating and forgery. While, the reasons behind IEP's decision to sell the stake back to Banans finally was not immediately clear, sourcessaidthePEfundhasbeen lookingforabuyerforaverylong time but has failed. When contacted by FE , Roshan Banan son of Jayaram Banan denied his family was in talks to buy IEP's stake but added that an offer in this regard was made to IEP sometimeback.“Wehadmadean offer to IEP sometime back but I amnotabletocommentonthisissue any further as there are several legal issues involved,” Roshan Banan told FE.

Incidentally, this is the second investment in which IEP is embroiled in a legal tussle with the promoters. In October 2013, IEP along with PE fund General Atlantic had moved the Company Law Board ( CLB) against one of its portfolio companies Fourcee Infrastructure over charges of fraud and embezzlement and willful deceit running into several hundreds of crores.