India Hospitality Corp said it would buy the Mumbai-based Mars Restaurant and airline catering company SkyGourmet Catering Private from Navis Capital Partners for $110 million.
Under the proposed transaction, IHC has also agreed to purchase the Nirulas chain of restaurants from Navis and its affiliates, subject to conditions.
Nirula's Group, in a statement, said the stake of Navis Capital Partners and Samir Kuckreja in the Nirula's Group remains unaffected by the purchase of Mars Restaurant and Sky Gourmet Catering. Navis Capital Partners and Samir Kuckreja will always continue to retain the management control of the Nirula's Group.
Navis is a private equity fund based out of Malaysia and had acquired a majority stake in Nirulas last year. IHC is a hospitality fund listed at London's Alternative Investment Market.
"Navis is retaining the option to reinvest a substantial portion of the sale proceeds into IHC. Navis and its affiliates will be granted an option to subscribe for up to $75.0 million in cash for the new ordinary shares, which, if exercised in full, would result in the ownership interest in IHC increasing to approximately 20.7 per cent on a fully diluted basis," stated IHC in a press release.
On completion of the transaction, the current shareholders of India Hospitality will own about 88.9 per cent, with insiders, including Hayground Cove Asset Management and Navis Capital Partners holding around 51.1 per cent.
The affiliates of Navis Capital Partners and Sanjay Narang, the founder of both SkyGourmet and Mars, will continue to play an active role in the management of the combined businesses going forward.
"The rising purchasing power of the Indian consumer, combined with the rapid emergence of low-cost airline carriers, is expected to drive strong airline passenger growth. This growth is driving major infrastructure investments in airports and this will create substantial expansion opportunities for hotels, restaurants and airline catering services. Infrastructure investments in shopping malls and office parks creates additional opportunities to leverage these restaurant brands in food courts," said Jason Ader, chairman and chief executive officer, IHC.
Mars operates two Gordon House Hotels, a modern four-star hotel chain catering to both the Indian business and high-end leisure traveller markets. Mars also has a diversified portfolio of restaurants, with eight primary brands including Tendulkars and Not Just Jazz By The Bay.
SkyGourmet currently operates from four locations and plans to expand this to 12 by 2009. It is also looking at increasing its aggregate capacity from 25,000 meals served a day to an anticipated 72,000 meals a day by 2009.
