Actis draws up Rs 150 crore IPO plan for Nilgiris group

Actis, a significant private equity player in the emerging markets, is looking to unlock value in the Nilgiris Group through an initial public offer (IPO).

Late last year, Actis picked up a 65 per cent stake in the south India-based group for $65 million (around Rs 300 crore). Actis had routed its investment through Nilgiris Diary Farm, which also owns a chain of retail stores.

According to industry sources, Actis has initiated talks with Citi to lead manage the issue. Sources further indicate that the IPO, which is expected next year, will carry a valuation of around Rs 600 crore.

Around 25 per cent is expected to be offloaded through the IPO, raising around Rs 150 crore in the process. Neither the Nilgiris management nor Actis could be reached for comment.

Actis, along with Singapore-based GIC Investments, effected a management buyout of the 100-year-old group, an established brand in the south, in October last year.

The group had a topline of around Rs 120 crore at the time. Actis brought in N C Venugopal as managing director. Prior to this, Venugopal was with Lotte Corporation (Parrys Confectionery).

Nilgiri's products include dairy products, bakery, chocolates and a variety of other local foods and snacks. All of its products are sold under the brand Nilgiris 1905.

Ever since the takeover, Nilgiris has been aggressive in expanding its retail presence, which consisted of 30 stores at the time of Actis' entry. In addition to this, the new investors have been strengthening the group's manufacturing operations in dairy, bakery and food segments.

Raja Chellayan, a member of the Nilgiris family and the chairman of the company, had earlier said, "In Actis, we have found a partner which understands the food business and appreciates the virtues of a heritage brand such as Nilgiris. Above all, Actis is a quality global investor which will contribute to the growth of Nilgiris through active board participation and by helping to expand our south Indian footprint."

The move by Actis to unlock value through an IPO comes after retail chains such as Vishal Retail and Koutons Retail tapped the primary market with healthy valuations.