Temasek Nears $10 Billion Deal for 10% Stake in Haldiram Snacks Foods

Feature and Cover Temasek Nears $10 Billion Deal for 10% Stake in Haldiram Snacks Foods

After prolonged negotiations, Singapore’s state-owned investment firm Temasek is close to acquiring a 10 percent stake in Haldiram Snacks Foods. This deal, valued at $10 billion, would be a significant milestone for the consumer products company, according to reports by Moneycontrol on Tuesday.

Both parties — the Agrawal family, which promotes Haldiram Snacks Foods, and Temasek — have signed a term sheet, marking an important step toward finalizing the agreement. Haldiram Snacks Foods represents the merged fast-moving consumer goods (FMCG) businesses of the Delhi and Nagpur branches of the Agrawal family, who have long been associated with the Haldiram brand.

Temasek was among several private equity (PE) firms, including Bain Capital and Blackstone, that had expressed interest in acquiring a stake in the unlisted company. However, it was Temasek’s offer that gained traction, surpassing Blackstone’s competing proposal for a 20 percent stake, which came with a lower valuation.

Deal Progress and Future Plans

Temasek is currently conducting due diligence and is anticipated to make a binding offer within the next month. Should the deal go through, it would rank among the largest transactions in India, especially given the company’s valuation. Sources indicate that the Agrawal family plans to capitalize on the booming initial public offering (IPO) market by listing the company within a year.

When approached, a spokesperson for Temasek declined to comment on what they termed “market speculation,” while the Agrawal family did not respond to email inquiries regarding the potential transaction.

Temasek’s Broader Investment Strategy in India

Temasek has been vocal about its commitment to India’s growth potential, especially in the healthcare, consumer products, and information technology sectors. In July last year, Ravi Lambah, Temasek’s head of India and strategic initiatives, announced plans to invest $10 billion in the country by 2027, which would bring its total exposure in India to $47 billion. Notably, this figure excludes investments made by Temasek subsidiaries in the region.

Lambah also highlighted Temasek’s focus on four key investment themes: increasing lifespan through healthcare, rising consumer demand, advancements in digitization, and sustainability. These priorities align with the expected expansion of Haldiram’s consumer products business, making the proposed partnership strategically significant.

Structure of the Haldiram Business

The Haldiram brand operates under three separate entities controlled by different branches of the Agrawal family in Delhi, Nagpur, and Kolkata. While each entity functions independently, a significant development occurred when the Delhi and Nagpur families decided to merge their FMCG operations. The merger combined Haldiram Snacks and Haldiram Foods International, which were part of the Delhi group, into a newly formed company, Haldiram Snacks Foods Private Ltd (HSFPL). In this merged entity, shareholders of Haldiram Snacks and Haldiram Foods International hold 56 percent and 44 percent stakes, respectively.

Post-transaction, HSFPL will oversee all consumer product operations for the Haldiram group, further consolidating the brand’s reach and market presence. Meanwhile, the Kolkata branch of the family continues to operate independently, retailing products under the brand name “Prabhuji.” In November, it sold a minority stake in its business to Bharat Value Fund for ₹235 crore.

Financial Growth and Market Potential

Haldiram Snacks Foods has demonstrated strong financial growth in recent years. In FY23, the company reported consolidated revenue of ₹6,375 crore, a significant rise from ₹5,195 crore in FY22. Its net profit for the year surged by 74 percent to ₹593 crore. Similarly, Haldiram Foods International saw consolidated net sales of ₹4,551 crore in FY24, reflecting a 10.9 percent increase, with net profit rising to ₹597 crore compared to ₹436 crore in FY23.

Private equity officials have noted the immense potential for Haldiram’s products in the international market. With its wide array of traditional Indian snacks and packaged foods, the company is well-positioned to tap into the growing global demand for Indian cuisine. This aligns with Temasek’s focus on consumption-driven growth and expanding markets.

Conclusion

The acquisition of a 10 percent stake in Haldiram Snacks Foods by Temasek signals a pivotal moment for the Indian FMCG sector. If the deal materializes, it will not only solidify Temasek’s presence in India but also provide Haldiram with the resources and strategic guidance to expand its operations further, both domestically and internationally. As the IPO market continues to thrive, the Agrawal family’s plans to list the company could unlock significant value for stakeholders while positioning Haldiram as a formidable player on the global stage.

Leave a Reply

Your email address will not be published. Required fields are marked *

More Related Stories

-+=