Promoters' demand for higher valuation has spoiled quite a few deals in the fast moving consumer goods (FMCG) space in India. In the latest development, IDFC Alternatives, the private equity arm of IDFC, has backed out from its discussions to acquire a minority stake in Manpasand Beverages, a Vadodara-based juice manufacturing and marketing company.
IDFC Alternatives was eyeing a 10 per cent stake in Manpasand, known for its fruit juice brand 'Mango Sip'. An email questionnaire sent to IDFC did not elicit any response.
Manpasand had received interest from various private equity players to acquire a minority stake in the company. In July, Business Standard reported Warburg Pincus and Everstone Capital were in discussions with Manpasand management to acquire a minority stake in the firm.
Another PE firm, SAIF Partners, already owns a minority stake in Manpasand with an investment worth $10 million. Deloitte and IDFC Capital are advising Manpasand management to find a suitable buyer.
As one among the few sectors which are insulated from regulatory issues, FMCG has seen increasing demand from private equity investors in the last couple of years. However, promoters' demand for high valuation remains a constraint for signing the PE transactions.
Manpasand, which has a turnover of Rs 300 crore, is looking for a valuation of Rs 1,500 crore for the business.
This year, the FMCG sector has witnessed 22 private equity and venture capital deals worth $314 million till date, compared to 25 deals worth Rs 600 crore in 2012, according to data from VCCedge.
Manpasand, known for its fruit juices brands such as Mango Sip, Apple Sip, Guava Sip and Litchi Sip in beverages segments, has a strong presence in tier-II cities in India. More than 90 per cent of the revenue comes from the Mango Sip brand.
The Indian packaged juices market is valued at Rs 1,100 crore and is projected to grow at a compounded annual growth rate of 15 per cent over the next three years, said a Technopak Advisors report.
Last year, Standard Chartered Private Equity had invested $32 million (Rs 165 crore) in Varun Beverages International, the largest bottler for PepsiCo in South Asia.
