KKR & Co. agreed to buy a controlling stake in Vini Cosmetics, the owner of the Fogg brand of deodorants, from the founders and Sequoia Capital for $625 million, betting that Indian consumers will continue to spend big despite the disruption caused by the pandemic.
The founders, led by brothers Darshan and Dipam Patel, will continue to hold a significant stake in Vini and collaborate with KKR to drive the company’s growth, the private equity firm said in a statement on Monday. Existing investor WestBridge Capital will also acquire an additional stake from Vini’s founder group to increase its shareholding.
While the financial details were not disclosed, a person aware of the transaction said KKR will buy around 55% in Vini Cosmetics, valuing the company at more than $1.1 billion. The Patel family owns around 61.68% of the company, with Sequoia and WestBridge Capital holding the rest, according to company filings with the ministry of corporate affairs.
The transaction reflects the continued interest of private equity investors in the Indian consumption growth story, industry experts said.
“Despite the pandemic, consumer goods companies and brands have seen demand only grow. Most FMCG companies are doing well. The number of consumers is growing, and investors continue to bet on this trend,” said Harminder Sahni, founder and managing director of consultant Wazir Advisors.
Founded in 2010, Vini manufactures, markets and distributes its branded deodorants, cosmetics and toiletries through its flagship brand Fogg and other brands such as Ossum and GlamUp. It sells its products through a network of 700,000 points of sale and 3,000 dealers. Vini’s products are also sold in South and West Asia. Darshan Patel started Vini after his family sold its pharma business, Paras Pharmaceuticals, to Reckitt Benckiser in 2010.
Sahni said investors are particularly keen on firms with a wide distribution network, such as Vini. “Also, we have seen that in online commerce—whose share is only increasing—the winners have always been the stronger brands,” Sahni said.
Darshan Patel will continue as the chairman of Vini’s board, and Dipam will be named vice-chairman.
“Vini has experienced remarkable growth over the last 11 years, but we believe we are in the early stages of what our brands can deliver as consumer demand for high-quality personal care products continue to explode in India, South Asia and other fast-growing markets around the world,” said Darshan Patel.
Vini Cosmetics’ revenue rose 21% to ₹1,070.9 crore for the year ended 31 March 2020 from ₹886.9 crore in the previous year, according to the latest filing with the registrar of companies. Profit rose 38% to ₹194.7 crore from ₹141.6 crore.
For KKR, the transaction reflects its new focus on buyouts in India as against its earlier mainstay of credit investments. This is the third major buyout for the PE firm in the past two years.
In December, KKR named Gaurav Trehan as the new chief of its private equity business in India, while Sanjay Nayar, who set up shop in the country more than a decade ago, was made the chairman of the buyout firm in India.
Apart from the major buyouts of JB Chemicals and Pharmaceuticals and waste management firm Ramky Enviro, in the past 12 months, the PE firm has invested in Lenskart, Reliance Jio and Reliance Retail.
“Darshan and Dipam are industry pioneers, and we are excited to work with them…to capture new growth opportunities, stemming from a young, emerging middle-class,” said Gaurav Trehan, partner at KKR.
