The Bikaner, Rajasthan-based company is looking to float an initial public offering (IPO) of about Rs 600 – 700 crore to help fund its expansion plans, one of the persons said, asking not to be named.

The IPO may also provide an exit opportunity to Lighthouse Funds. The structure of the issue, including an offer for sale by Lighthouse, is still being worked out, the person cited above said. Lighthouse had picked up a 12.5% stake in the snacks maker for Rs 90 crore in April 2014.

The company did not respond to an email query till the time of filing this article. Bikaji’s plan comes after a record year for IPOs in India when domestic companies raised nearly $10.4 billion via initial share sales in 2017 thanks to buoyant stock markets.

If it does go public, Bikaji will join the likes of Prataap Snacks and DFM Foods. Prataap Snacks, which makes Yellow Diamond chips, made a strong debut on the bourses last year. Prataap Snacks counts venture capital firm Sequoia Capital as an investor. DFM Foods, which operates under the brand Crax, counts private equity firm WestBridge Capital as a key shareholder.

Last April, VCCircle reported that Balaji Wafers Pvt. Ltd was also mulling an IPO. However, a couple of months later, founder Chandu Virani was quoted by The Hindu Business Line as saying that while the company had indeed been thinking about floating an IPO, there was no need to go public so long as banks were willing to lend.

Bikaji Foods

Promoted by Shiv Ratan Agarwal, the snacks maker was earlier called Shivdeep Industries Ltd. It was established in 1986 as a partnership concern before being converted into a limited company in 1995.

The company used to sell its products under the Haldiram’s brand until 1993, when it parted ways with the Nagpur-headquartered Haldiram Foods International Pvt. Ltd and took the Bikaji brand name. Bikaji makes Indian snacks such as bhujia, papad, namkeens and sweets including rasgulla at its factory in Bikaner.

The company operates in a fragmented and unorganised food industry, where it faces competition from local manufacturers as well as organised players, according to a June 2017 report by credit rating firm ICRA.

Apart from its home turf of Rajasthan, the company has a strong presence is a few other states such as Bihar and Assam.

According to the ICRA report, the company began an expansion programme entailing a capital expenditure of Rs 280 crore in the financial year 2013-14. The expansion plan will be completed by the end of March and will take the company’s total installed capacity to 277 tonnes a day, the ICRA report said.

According to VCCEdge the data research arm of VCCircle, Bikaji posted a net profit of Rs 41.3 crore on net sales of Rs 550.6 crore for the year ended in March 2016. Its revenue more than doubled in the four years through 2015-16 and net profit quadrupled, VCCEdge data show.

Lighthouse

The PE firm invests in mid-market companies in India spanning sectors such as consumer goods, personal care, lifestyle, food and beverage, agriculture, building materials, healthcare and financial services. The US-headquartered private equity firm was set up in 2001 by Mukund Krishnaswami, a former executive at Lehman Brothers’ private equity unit, and William Sean Sovak. It has been investing in India since 2006. The PE firm is on the road to raise $200 million for its third fund, Lighthouse India Fund III Ltd. In December, International Finance Corporation and its asset management arm announced a plan to invest $45 million in Lighthouse’s third fund. Lighthouse’s last exit was in February 2017 when it had sold its stake in Unibic Foods to Peepul Capital.

(As published in vccircle on Wed, January 03 2018. )