CCD may offer 10-15% to PEs

MUMBAI/BANGALORE: Private equity players including Darby Overseas Investments and a PE arm of Deutsche Bank are in the race to invest $75-100 million in Cafe Coffee Day (CCD), the Bangalore-based chain of cafes, to buy around 10-15% stake, according to sources.

The enterprise valuation of Amalgamated Bean Coffee Trading (ABCTL), the parent of CCD, is pegged between $550 million and $600 million. The funds will be used to ramp up the company’s expansion plans across the country.

While an e-mail to the company remained unanswered, senior officials told ET, “Nothing has been finalised as of now and it will take a few weeks.”

It is believed that some of the big PE firms like Carlyle group and Sequoia (which is a current shareholder in the company) have been in the picture for buying a stake.

ABCTL chairman VG Siddartha at a recent interaction with ET said that the group was looking at raising its tally of cafes to 750 stores by June next year, and possibly to 2,000 stores over the next 4-5 years. There is market speculation that Mr Siddartha will revamp the operations, making ABCTL a holding company, separating the plantation business from the retail operations (CCD).

Cafe Coffee Day or CCD is one of the leading coffee exporters of India with clients across the US, Europe and Japan. The other players in the cafe retailing business include Barista and Tata Coffee-owned start-up outlet Mr Bean Junction. CCD recorded a turnover of Rs 400 crore for the fiscal ended March 31, 2007 and plans to increase it to Rs 600 crore by the end of the current fiscal.

CCD, which had recently forayed into the overseas markets by opening outlets in Vienna and Karachi, had recently announced plans to invest Rs 100 crore over the next 12-15 months as part of its plans to expand in the Indian as well as overseas markets.