Cafe Coffee Day said to plan IPO at $1 bn

Cafe Coffee Day, India's biggest coffee chain, has started interviewing investment banks for a possible initial public offering in Mumbai next year, sources said.

The company, backed by KKR & Co, could seek a valuation of about $1 billion, according to sources, who asked not to be identified as the deliberations are confidential. It plans to file a draft prospectus with India's market regulator later this year.

The offering could help Cafe Coffee Day extend its lead in India over rivals including Starbucks Corp, which opened its first store in India in October 2012 through a joint venture with Tata Group. Cafe Coffee Day has 1,650 outlets in the country, more than three times all its competitors combined, according to a September report from consultant Technopak Advisors Pvt.

KKR, the private-equity firm run by billionaires Henry Kravis and George Roberts, invested in Cafe Coffee Day's holding company in 2010 together with Standard Chartered Plc's private equity unit and New York-based New Silk Route Partners, according to a KKR press release.

The owners haven't made a final decision on whether to list just the coffee chain or its parent company Amalgamated Bean Coffee Trading Co, which also owns coffee plantations and luxury resorts in India.

K Ramakrishnan, president of marketing at the coffee chain, directed queries on financial matters to Chairman V G Siddhartha. Siddhartha's office has not responded on the issue.

Specialist coffee
Cafe Coffee Day is the leader in India's specialist coffee shop sector with a 64 per cent market share, according to Euromonitor data. The market is projected to grow to $340 million in 2018, from $277.8 at the end of last year, Euromonitor estimates.

The chain plans to add 350 outlets by the end of next year to a total of 2,000, Ramakrishnan said in a May 24 interview.

At least 65 percent will be in high-street locations in the main residential and shopping districts in a city, he said.

Barista Lavazza, owned by Torino, Italy-based Lavazza Spa, was India's second-largest coffee chain as of September, followed by London-based Costa Coffee, according to the Technopak report.