With their often tempestuous six-year relationship set to end, warring partners PE fund Actis and the Mudaliar family (stakeholders in the century-old retail chain Nilgiri Dairy Farm) are at loggerheads on how to go about the split.
While the market is rife with buzz of Actis Private Equity hawking its 67 per cent stake, it is understood the PE fund is trying to impress upon the original promoters of the dairy and the retail chain — the Mudaliar family — to exit its 33 per cent share as well.
“We are aware there are discussions between the two stakeholders, and Actis is explaining to the family members the asset would be valued better if a new investor, either financial or strategic, buys the entire 100 per cent. However, the family has not agreed to that option yet,” senior members of the Mudaliar family told Business Standard.
In early 2006, Actis had invested $65 million for 67 per cent stake in Nilgiri Dairy Farm, against the wishes of some Mudaliar family members. Nilgiri Dairy Farm operates 120 Nilgiri’s stores through franchisees. It is operationally profitable, with system sales of about Rs 800 crore.
Prabhu Ramachandran, who owns more than 80 per cent of the Mudaliar family’s 33 per cent stake, categorically said he would not exit. He said Actis couldn’t sell stake without his consent. “I am not exiting... It is just not possible that Actis can sell stake without our consent. If it goes ahead without it, we would have to explore various actions,” he said. Though Actis did not comment, it had earlier told Business Standard it had to plan an exit eventually, as was the case with all PE firms. It is understood Actis is trying to script an exit by the end of this year and has mandated HSBC to find a buyer.
The stakeholders had approached the Company Law Board to settle differences over a rights issue but the matter was resolved.