ChrysCapital has invested INR 2.5 billion (€34 million; $44 million) in fast-moving consumer goods company CavinKare in a structured deal, according to a company statement. Managing director of Gulpreet Kohli has taken a board seat at the company.
The details of the structured deal were undisclosed, but the general idea is that the stake the firm takes in the investment depends on a number of factors, including company performance post-transaction. Firms often do such deals to mitigate risk.
CavinKare is a diversified consumer business with brands in personal care, dairy, snacks, foods and beverages and the investment will be used to expand its current brand portfolio.
“The FMCG market in India is looking at exponential growth with the size and demographic potential. CavinKare has high quality system-driven and highly transparent business practices and is innovative and differentiated in its approach in building product categories,” Kohli said in a statement.
Actually you are seeing much better pricing today on deals [in India] than you were two years ago. There is a lot less competition [for] smaller deals.
Gulpreet Kohli, managing director, ChrysCapital
In an interview with Private Equity International, he added, “Actually you are seeing much better pricing today on deals than you were two years ago. There is a lot less competition [for] smaller deals. We're looking at deals at around $20 million to $75 million and there is less competition from the global guys in the $40 to $50 million range. A lot of the India funds are also struggling to raise capital so there are fewer number of players.”
ChrysCapital raised its sixth India fund in May 2012, hitting its $510 million hard cap. CavinKare is the firm’s fourth investment from the vehicle, which is now about 25 percent invested, Kohli told PEI.
Few firms have had been able to raise capital for India, which has fallen out of favor with international investors. However, in May this year, Tata Capital made a final close on its latest Tata Opportunities Fund at $600 million – the largest debut fund ever raised in India.
“It has been a challenging period for fundraising in India,” Paddy Sinha, managing director of Tata Opportunities Fund, told PEI earlier. “There are quite a few investors that have been disappointed with private equity performance in India, particularly in the vintages where a lot of investments happened in 2006 to 2008 and they are looking for returns from that portfolio before making incremental commitments.”