Home-grown beauty and wellness chain VLCC expects to raise about Rs 250 crore by selling a minority stake to private equity (PE) within the next few weeks to support acquisitions in the south-east Asia, said a company source.
The company, which is valued at $400 million, is in advanced talks with a few PE firms in India and abroad for the fund raise.
“Funds raise would be used in capital expenditure and to finance acquisitions,” said the source. JM Financial is advising VLCC in the fund raise. Everstone Capital owns a 15 per cent stake in VLCC since 2007, while remaining 85 per cent is owned by the promoters.
CLSA, which has a 13.65 per cent stake in VLCC made an exit through management buyout in 2004.
Everstone is likely to stay in the immediate round of funding, but could make a partial exit depending on the valuation.
“VLCC expects to close more than one acquisition in the next six to eight months. It is currently evaluating five companies in South-east Asia, Middle East and North Africa. The first one is expected to be sealed in a few weeks in the wellness space in South-east Asia,” said the source. The company has been trying to acquire wellness companies in Asia during the past few years, but all its attempts failed.
The company plans to spend about Rs 300 crore for growth over the next 12 months, said the source. Of this Rs 150 crore would be spend in overseas expansion, he said, adding that investment could increase depending on “size of acquisitions”.
VLCC, which operates 180 wellness centres in India and abroad, hopes to increase the number to about 300 by 2015, said the source.
Besides metro cities, the company would spread wings in tier-II and tier-III cities.
Through acquisitions, VLCC targets to expand presence in 15 countries within two years, from nine at present, said the source.
Overseas business should contribute about 45 per cent in two years from about 30 per cent at present, added the source.
The company is also in process of establishing a manufacturing unit in Bangladesh to cater local needs and the Myanmar market.
“VLCC is also doing a feasibility study for setting up a manufacturing unit in Bahrin,” pointed out the source. It is also actively exploring Pakistan market.
However, there is no immediate plan for an initial public offering (IPO), though it had considered the option earlier. “This is not the right time for entering the market,” said the source.
In March this year, Everstone Capital has invested up to Rs 100 crore in salon-chain You Look Great (YLG), in phases, according to media reports. Venture fund Helion Venture Partners also invested in YLG in two rounds. In October 2010, Enrich Salon raised about $10 million from JM Financial’s private equity arm. Naturals Beauty Salon India is also reportedly seeking PE funding in the range of Rs 100 crore
