PE firms brew $220m coffee investment

KKR, New Silk Route and Standard Chartered Private Equity are close to a deal that would see them back one of India's largest coffee house chains.

Kohlberg Kravis Roberts, New Silk Route and Standard Chartered Private Equity are close to making a $220 million investment in Indian coffee house chain Coffee Day for a significant minority stake, a source has confirmed.

A Standard Chartered spokesman confirmed the firm is investing $50 million in the company, but declined to comment further. KKR declined to comment. New Silk Route did not respond to a request for comment.

Coffee Day is engaged in coffee procurement, processing and retailing. It owns and operates Café Coffee Day (CCD), India’s largest coffee house chain. Its first outlet was set up in the southern city of Bengaluru in 1996 and it now has more than 820 cafés across India. CCD also has outlets in Vienna and Karachi and plans to expand across the Middle East, Eastern Europe, Egypt and Southeast Asia in the near future. 
 
Coffee Day has drawn private equity interest for a few years now. Other firms that have invested in the company in the past include JPMorgan, which invested $250 million in the company in 2008; Darby Overseas Investments, which invested $25 million from its mezzanine fund also in 2008; and Sequoia Capital. 

Standard Chartered Private Equity made five investments in India in 2009. This includes an INR1.5 billion (€24 million; $33 million) investment in Firepro Systems, a fire and electronic safety solutions provider, in December.

Earlier this month, New Silk Route, a private equity firm focused on South Asia, the Middle East and other emerging Asian economies, invested INR2.52 billion in Nectar Lifesciences, an integrated pharmaceutical company, reportedly for a stake of about 30 percent in the company.

KKR has made three investments in India thus far. The first of its deals was the $900 million investment it made in 2006 to acquire a controlling stake in Aricent, then known as Flextronics Software Systems. In September last year, the firm increased its stake in the company by investing another $255 million alongside Canada Pension Plan Investment Board. 

Also in 2009, the firm invested in Max India, a multi-business corporate providing healthcare and life insurance services. In 2008, KKR invested $250 million for a minority stake in Bharti Infratel, a telecom tower company.