The private equity arm of London-headquartered bank Standard Chartered Plc. is investing $56 million in Ravi Jaipuria’s Varun Beverages (International) Ltd, which is involved in bottling, distribution and marketing of PepsiCo Inc. The funding from Standard Chartered Private Equity Ltd (SCPE) will help Varun Beverages expand its business in India and overseas. The company sells the brands owned by the US-based PepsiCo Inc., such as Pepsi, 7UP, Miranda and Mountain Dew, in India, Sri Lanka, Nepal and Morocco.
It also manufactures and markets other drinks like Aquafina drinking water and juices like Tropicana and Slice. According to the RJ Corp site, the beverage division has a total turnover of over Rs 800 crore, with 52 per cent market share in South Asia.
Varun Beverages’ promoter RJ Corp has business interests in areas like beverages, fast food restaurants, ice cream & dairy products, breweries, education, healthcare and hospitality. In May this year, its group firm Devyani International had raised private equity funding from ICICI Venture. Devyani owns and operates India franchisees of Pizza Hut, KFC and UK-based coffee chain Costa Coffee, besides running Disney Artist outlets in the country.
Besides Devyani and Varun Beverages, RJ Corp also has a joint venture with global beer giant Anheuser-Busch InBev (AB InBev), which sells brands like Budweiser and Beck’s. It also has a JV with French dairy firm Candia, selling Cream Bell ice cream.
“To convert the huge opportunity of growth, penetration and enhanced territories, domestically and internationally, into reality, we need to build, year after year, large capacities, involving huge capital expenditure. Induction of SCPE in the group’s core business of beverage shall help grow this business faster,” said Varun Beverages’ chairman Ravi K Jaipuria.
“The business model is now totally hedged through operations at multiple geographies and the induction of SCPE provides new opportunity to leverage the financials, expand at much faster pace and bring economies of scale,” said Raj Gandhi, president and group CFO.
“The current low per capita consumption of soft drinks in India offers tremendous opportunity for Varun Beverages. The company’s growth may be further aided through inorganic means. We are very excited to be a part of the company’s next stage of expansion,” said Udai Dhawan, director at SCPE, who will be joining the board of Varun Beverages.
Standard Chartered Private Equity Ltd (SCPE) has invested over $2 billion in mid-to-late-stage companies in need of expansion capital or acquisition finance and also in management buy-outs. The PE firm has been a fairly aggressive investor in India this year, involved in large deals like buying 12 per cent stake in Redington India (a distributor of telecom and IT products) and GMR Infrastructure’s airport arm.