New Delhi, July 22 -- Global consumer-focussed private equity firm L Catterton is evaluating picking up majority stake in a south India-based restaurant chain operator, at least two people aware of the development told VCCircle.
L Catterton, as per aforementioned individuals, is in talks to invest in biriyani focussed Thalappakatti Hotels Pvt Ltd.
Thalappakatti, which also counts homegrown private equity firm CX Partners among its early backers, is likely to seek a valuation between Rs 1,200-1,500 crore (around $124-155 million).
However analysts tracking the restaurant chain said that over six-decades-old firm may command an Ebitda multiple of 15x and may end up receiving not more than Rs 700-750 crore (around $73-78 million) in terms of valuation. However the claim couldn't be independently ascertained.
Email queries sent to L Catterton and Thalappakatti Hotels remained unanswered till the time of publishing this news article.
Operating under the brand name Dindigul Thalappakatti Biriyani, the firm was launched in 1957 by Nagasamy Naidu. The entity currently operates over 100 outlets across Tamil Nadu, Karnataka, Kerala and Puducherry among others.
CX Partners had led a Rs 260 crore round in Thalappakatti in 2019, valuing the firm at Rs 450 crore-Rs 480 crore. A fresh round two years later valued the firm at around Rs 880 crore.
The firm had posted consolidated net sales of Rs 469 crore in FY25 as against Rs 404 crore a year earlier. The company's profit rose to Rs 9.8 crore from Rs 3.2 crore over the same period, as per VCCEdge.
As for L Catterton, the firm has significant experience in building brands in the packaged food space across the world. Current and past investments in the space include Cholula Hot Sauce, Farmley, Ferrara Candy Company, Goodles, Kettle Foods, Kodiak, Little Moons, NotCo, Planted and Plum Organics.
VCCircle reported last September that L Catterton marked the first close of its India-centric investment vehicle with around $200 million (around Rs 1,805 crore then). The category II alternative investment fund (AIF), known as L Catterton India Fund I, has a target of $400 million with an additional greenshoe option of $200 million.
Some of its noteworthy consumer investments in India include snacks maker Haldiram's and Impresario, which runs popular F&B labels Social and Smoke House Deli. It owns a majority stake in Impresario and, if it buys Thalapakatti Hotels, it could end up creating a restaurant plaform that it could sell forward, possibly even to Haldiram.
Dealmaking activity in India's restaurant and QSR chain segment has been strong in the recent past.
In May, VCCircle reported that Dubai-headquartered investment firm Pulsar Capital is among the frontrunners to invest in a bootstrapped eatery chain based in southern India.
In April, Siguler Guff & Company, an American multi-strategy private market investor with over $18 billion in assets under management, invested $40 million (around Rs 379 crore) in Trimex Foods Pvt. Ltd, the Indian franchise operator of global restaurant brands Chilli's Grill & Bar, PAUL, and Cinnabon.
In March, homegrown burger chain Burger Singh raised Series B funding, led by Singapore-based investment firm Artal Asia.
In January, quick service restaurant operators Sapphire Foods India Ltd merged with Devyani International Ltd. to become one of the largest QSR chains in the country, operating the KFC and Pizza Hut outlets.
Published by HT Digital Content Services with permission from VC Circle.