India Equity to buy Innovative foods

NEW DELHI: New York-based India Equity Partners is set to acquire a majority stake in Tata Group company Innovative Foods for Rs 75 crore, a source familiar with the development said. Innovative Foods, the makers of Sumeru frozen food, is a part of the Tata group-led Indian Hotels Company Ltd. It has revenue of nearly Rs 50 crore. “The acquisition, worth Rs 75 crore, will help Indian Equity Partners get a foothold in the food services space,” the source said, adding the private equity firm has earmarked funds up to $100 million for acquisitions in the fast-growing food sector.

When contacted, Gaurav Mathur, MD at Indian Equity Partners, declined to comment on the development . An email sent to Indian Hotels Company Ltd did not elicit a response , but a senior company official , who did not wish to be named, confirmed the development. Indian Equity Partners recently brought on board Arvind Nair, former CEO of Domino’s Pizza and DLF retail, and Kannan Sitaram, who worked as COO at Dabur India, as the firm’s operating partners to lead acquisitions in this space. The packaged food industry in India is currently pegged at Rs 2,500 crore and is seen growing at 25% a year.

The salt-to-steel conglomerate Tata Group has presence in the food segment through group companies Tata Tea, Tata Coffee and Tata Chemicals (Tata Salt). Innovative Foods was acquired by Indian Hotels from the Amalgam Group in July 2007 as part of its strategy to foray into the processed food segment. “Innovative Foods was too small a company to get the kind of attention it required from the Tatas,” said a person close to the private equity firm.

India-focused India Equity Partners has been in talks with Innovative Foods for a year-and-a-half and had sought de-listing of the company from the BSE prior to the acquisition . The de-listing happened in January 2010, pursuant to an order of the Board for Industrial and Financial Reconstruction passed in August 2009. Innovative Foods, which has plants at Alleppey, has a host of products other than those available under the brand name ‘Sumeru’ .