Advent bids for controlling stake in Nilgiris Dairy

Two PE majors are vying for the close to 70% stake owned by Actis, the emerging market PE fund that had invested $65 mn in Nilgiris Dairy during Sept' 06

The race to acquire India’s oldest and iconic retailer - Nilgiris Dairy, is getting intense with one more major global buyout fund —Advent International — joining the fray. Advent International, the UK-based buyouts specialist, is understood to be actively engaged in this transaction and is squaring up against Singapore-based Temasek.

The two PE majors are vying for the close to 70 per cent stake owned by Actis, the emerging market private equity fund, which invested $65 million in Nilgiris Dairy during September 2006. Actis has mandated HSBC to find a buyer for its stake with a base price of $120 million on the enterprise. The rest 30 per cent is held by the promoter - Mudaliar family and discussions are also on with them to offload their stake.

Founded in 1905, Nilgiris Dairy operates an established network of around 120 neighbourhood convenience retail outlets through the franchisee network across South India. Nilgiris rose to fame, not only on the fresh dairy and bakery expertise, but on their private-label groceries, which is a big draw at its retail stores. It is understood that Nilgiris derives around 20 per cent of the Rs 700 crore store sales from these private label goods, which is expected to be scaled up to 30 per cent in the near future, to drive profitability.

Actis Private Equity, after initial differences with the promoters on how the retail chain should be run, has been able to settle all issues and turn around the company, which is en route to be operationally profitable. While Actis on its part declined to comment on engaging with either Advent International or Temasek, the funds could not be reached for comments. It is understood that Actis is looking to sew this deal up by end of 2012.

In addition to engaging with the PE funds, Actis is also understood to be exploring exiting its stake through the strategic route and has reached out to at least two retail chains which has expansive presence in Asia.

If Advent International does indeed manage to clinch this deal, it will be its second deal after its $105 million investment in Hyderabad-based hospital chain Care Hospitals.

Founded in 1984, Advent is one of the world’s leading global buyout firms, and has raised €19.4 billion in private equity capital and, through its buyout programmes, has completed over 270 transactions in 35 countries.

Advent focuses on buyouts and strategic repositioning opportunities in five core sectors - business & financial services, healthcare, industrial, technology, media & telecom besides retail, consumer & leisure.