West-Bridge Capital is in discussions to take majority control of Vini Cosmetics, valuing the maker of Fogg deodorants at about Rs 6,500 crore, two years after it first backed the Ahmedabad-based consumer goods company, people familiar with the matter said.
The India-focussed fund plans to pick up an additional 30% stake in the company from early investor Sequoia Capital and the promoter group for around Rs 2,000 crore, the people briefed on the matter said. If the transaction goes through, WestBridge will end up with a slightly over 50% shareholding in the Darshan Patel-founded company. Vini was valued at Rs 4,000 crore in 2017, when it last raised capital from WestBridge, which has invested in Star Health Insurance and diagnostics chain Dr Lal PathLabs, among others.
“The due diligence process is currently ongoing and is likely to conclude in a month’s time. While Sequoia is expected to make a complete exit, the promoters will shed about 15% of their holding,” said one person.
Patel co-founded Vini with younger brother Dipam Patel in 2009 and they together own more than 60% in the company. Sequoia and WestBridge hold 17% and 20%, respectively.
WestBridge would want to build Vini into a large consumer goods company by acquiring brands and possibly tapping the public markets at a later stage, another person said.
In the past couple of years, Vini had explored a strategic sale and the possibility of going public.
Patel and Sequoia declined to comment on the matter, while WestBridge did not respond to ET’s emailed questionnaire till press time.
For WestBridge, which last year bought Star Health Insurance as part of a consortium, taking majority control of Vini will be a big bet on the India consumer story, where new brands in the value segment have growth potential.
Vini’s turnover climbed 20% to about Rs 1,000 crore in FY19. Fogg deodorants account for almost 80% of company sales, which include brands such as facial powder White Tone and facial cream Glam Up.
Fogg remains the market leader with an 18% share in a Rs 3,047 crore deodorant segment nationally, followed by ITC’s Engage at 11%, as per recent data from Nielsen.
Silicon Valley venture fund Sequoia is expected to snag a good return on its early investment in Vini, which it first backed in 2013 at a valuation of about Rs 850 crore. Sequoia had ploughed in $48 million through its India and global fund over the past six years. Bay Capital took home Rs 500 crore when West-Bridge came on board two years ago, having put in Rs 30 crore in 2011.
Patel, who has been the CEO of the company, may step down and take a non-executive role, one person said. Patel has been credited with building consumer brands such as Moov, Livon, Itch Guard, Set Wet, Krack and Dermicool at his family owned business Paras Pharmaceuticals, which was sold to Reckitt Benckiser in 2010.
PE majors are increasingly pushing to acquire control of companies in India as they look to drive strategy and corporate governance in growth-stage entities with potential to scale up as promoters start to warm up to this kind of an arrangement.
Advent International acquired Dixcy Textiles, which sells innerwear brand Dixcy Scott, and took controlling stake along with Temasek in Crompton Greaves Consumer Electrical. Everstone bought Modern Bakery from Hindustan Unilever while Sequoia owned more than 60% in Prataap Snacks, the maker of Yellow Diamond brand of chips, which went public in 2017.
Source: Economic Times