Temasek is nearing a deal to acquire a 10% per cent stake in Haldiram Snacks Foods, valued at $10 billion.
After prolonged negotiations, Singapore government-owned investment firm Temasek is nearing a deal to acquire a 10 per cent stake in the consumer products firm Haldiram Snacks Foods, valued at $10 billion, from the promoters.
Both the Agrawal family -- the promoters of Haldiram Snacks Foods -- and Temasek have signed a term sheet for the deal, Moneycontrol reported on Tuesday.
Haldiram Snacks Foods is the combined fast-moving consumer goods (FMCG) business of the Delhi and Nagpur families of the snack major.
Temasek was one of several private equity (PE) firms, including Bain Capital and Blackstone, that had made offers to the Agrawal family to purchase a stake in the unlisted firm.
The competing offer from American PE major Blackstone was for a 20 per cent stake but at a lower valuation.
Temasek is now moving forward with due diligence and is expected to make a binding offer within a month.
If the deal fructifies, it would be one of the largest deals in India, considering the total valuation (see chart).
The promoters are looking to list the company within a year to cash in on the ongoing initial public offering boom, bankers said.
A Temasek spokesperson declined to comment on 'market speculation'. The Agrawal family did not respond to e-mail queries on Tuesday.
Earlier, Temasek officials had expressed optimism about India's health care, consumer products, and information technology sectors.
The firm plans to invest $10 billion in India by 2027, bringing its total exposure in the country to $47 billion.
This figure excludes investments made by Temasek subsidiaries in India, its head of India and strategic initiatives Ravi Lambah had said in July last year.
Temasek is looking at four themes for investments: Increasing lifespan via healthcare, consumption, digitisation, and sustainability.
The Agrawal family operates three different entities in India, with Delhi, Nagpur, and Kolkata families running separate businesses under the founder's Haldiram brand.
However, the Delhi and Nagpur families merged the FMCG business of HFIPL and Haldiram Snacks, part of the Haldiram Delhi group, into a newly incorporated entity named Haldiram Snacks Foods Private Ltd (HSFPL).
The existing shareholders of HSPL and HFIPL acquired 56 per cent and 44 per cent shareholding, respectively, in the merged entity.
Post completion of the transaction, HSFPL would undertake the consumer products operations of the entire Haldiram group.
In November, Kolkata-based Haldiram Bhujiawala sold a minority stake to Bharat Value Fund for Rs 235 crore (Rs 2.35 billion).
Haldiram Bhujiawala retails its products under the brand 'Prabhuji'.
PE officials said the Indian company had huge potential, with a large export market waiting to be exploited for Haldiram's food products.
In FY23, Haldiram Snacks reported revenue of Rs 6,375 crore (Rs 63.75 billion), compared to Rs 5,195 crore (Rs 51.95 billion) in FY22, on a consolidated basis.
Its net profit was up 74 per cent to Rs 593 crore (Rs 5.93 billion) in FY23.
Haldiram Foods International saw its consolidated net sales at Rs 4,551 crore (Rs 45.51 billion), up 10.9 per cent in FY24, and its net profit stood at Rs 597 crore (Rs 5.97 billion), compared to Rs 436 crore (Rs 4.36 billion) in FY23.
How Haldiram Attracted Global Investment
Sharleen D'Souza
The Haldiram's brand, now a household name, had a humble beginning on the streets of Bikaner in 1937, founded by Ganga Bishan Agrawal, fondly called Haldiram.
Global private equity investors have been eager for a piece of Haldiram's for a while, and finally, the family has taken the first step towards parting with a portion of the company, which commands a dominant share in the Indian savouries market.
The Agrawal family, which is at the helm of the >bhujia empire, has been in talks to raise funds for some time.
From reports of the company selling a majority stake to now signing a term sheet to sell a fifth of the company at a valuation of $10 billion, the company has been in discussions with investors and fast-moving consumer goods (FMCG) firms to find a suitable partner for over a year.
News reports in recent years have also mentioned a possible stake sale, with companies like PepsiCo and Kellogg's in the fray to grab a bite of the Indian savoury snack producer.
In September 2023, Tata Consumer Products was also in talks to buy a 51 per cent stake in Haldiram's but was not comfortable with the $10 billion (Rs 83,300 crore/Rs 833 billion) valuation sought by the promoters, Reuters reported.
According to the news agency, Tata Consumer was in talks to sell an additional 10 per cent stake to Bain last year, prior to a potential listing in the stock markets, but the deal fell through.
The Haldiram's brand, now a household name, had a humble beginning on the streets of Bikaner in 1937, founded by Ganga Bishan Agrawal, fondly called Haldiram.
Later, the business split into three different entities: One in Delhi which was started by Manoharlal (Haldiram's gramdson), one in Nagpur by Shiv Kishan (Haldiram's grandson), and one in Kolkata, all under the founder's name, Haldiram's.
The Delhi and Nagpur families, however, came together and merged the FMCG business of Haldiram Foods International (HFIPL) and Haldiram Snacks (HSPL), part of the Haldiram's Delhi group, into a newly incorporated entity named Haldiram Snacks Foods (HSFPL).
The existing shareholders of HSPL and HFIPL would acquire 56 per cent and 44 per cent shareholding, respectively, in the merged entity.
Upon completion of the transaction, HSFPL would take over the consumer products operations of the entire Haldiram group.
In November last year, Kolkata-based Haldiram Bhujiawala sold a minority stake to Bharat Value Fund, which invested Rs 235 crore in the company for a minority stake.
Haldiram Bhujiawala retails its products under the brand Prabhuji.
'The Delhi and Kolkata families have been warring in court since 1991 to establish who has the actual right to use the Haldiram Bhujiawala and Haldiram's brand in Delhi. While the legal battle only began in the early 1990s, the seeds of enmity were sown a generation before,' notes a book on the family.
However, in 1999, the high court gave a breather to the Delhi brothers.
The brand-name tussle continues between the two businesses.
According to Bikaji Foods, a rival in the ethnic food space, the ethnic namkeen and snacks, ethnic bhujia, and western snacks market in 2021-2022 was valued at Rs 10,800 crore (Rs 108 billion) and is expected to reach Rs 19,500 crore (Rs 195 billion) by 2025-2026.
Feature Presentation: Ashish Narsale/Rediff.com
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