Cremica eyes IPO to allow PE investor exit as owners divide business

Mrs Bector’s Food Specialities Ltd, owning the Cremica brand, is likely to go for a public listing of its biscuit unit. This would be after demerging it from other businesses, to facilitate an exit for its private equity (PE) investor, Motilal Oswal PE, which owns about 20 per cent in the company.

The promoter family can also explore the option of buying back Motilal Oswal PE’s stake if a public listing is not feasible for now, said people close to the family, on condition of anonymity. The family will continue to control the brand and is unlikely to have any external investor with a majority stake holding.

Motilal Oswal PE invested in Cremica in 2010 by buying out the stake of Jade Garden, the Mauritius-based unit of US banking giant Goldman Sachs, for about Rs 70 crore. Goldman Sachs had invested in Cremica in 2006.

According to sources, Motilal Oswal PE has been assured a three-times return on its investment. Email queries to the PE firm for this story did not elicit any response till press time.

The promoters think a demerger is necessary to ensure investors get an assured return on their investment, say the sources. After the demerger, the biscuit business, which contributes 65 per cent of the company’s revenue, is likely to be controlled by Anoop Bector, son of Rajni Bector, who founded the company. Akshay Bector, another son, will control the condiment business, while Ajay Bector might not be directly involved with any business. The three brothers hold almost equal stakes in the company.

“All arrangements will ensure best possible value for all the investors. We are yet to decide anything,” said Akshay Bector, who is managing director. At present, he looks after the condiments business.

Cremica is the sole supplier of buns, liquid condiments, batter and breading to McDonald’s. It also supplies to Hindustan Unilever, Big Bazaar, Spencer's, Taj Group, ITC, Jet Airways, Air India, Barista, Café Coffee Day, Pizza Hut, Domino's and Papa John's.

The company hopes to close this financial year with a revenue of Rs 700 crore, up from Rs 500 crore reported during the year ended March 31, 2011.

Cremica, which also has products such as breads, sauces, bread spreads, ready-to-eat curries and syrups, will focus on those areas, which is growing faster than the biscuits, after the demerger.