Sequoia picks up 9% in Darshan-Patel-owned Vini Cosmetics

Stake has been acquired for about Rs 100 crore, valuing firm at over Rs 1,100 crore or nearly six times sales

Private equity investor Sequoia Capital has picked up a 9% stake in former Paras- Pharma-promoter Darshan Patel's new venture Vini Cosmetics.

The stake, according to persons in the know, has been acquired for about Rs 100 crore, valuing the firm at over Rs 1,100 crore or nearly six times sales.

Vini, which began in 2010, closed the last financial year with sales of Rs 170 crore. It markets deodorants such as Fogg and 18+ as well as talcs such as White Tone and Jinjola.

Patel, who is chairman & managing director of Vini, confirmed the news saying the funds would be utilised for expansion of the company's product portfolio as well as increasing its distribution footprint. On the cards, is a foray into areas such as skincare and haircare besides neutraceuticals, he said.

Vini is the latest in a series of PE transactions in the fast moving consumer goods (FMCG) space. According to advisory firm Grant Thornton in July alone there were two PE deals, one involving India Value Fund, which picked up an undisclosed stake in food ingredients major VKL Seasoning for Rs 240 crore. The second one was a Rs 60-crore investment by Quadria India in Chennai-based Capricorn Food Products.

In the month of June, CavinKare, maker of Nyle and Chik shampoos, saw an investment of Rs 250 crore by Chrys Capital, while Bangalore-based TTK Prestige saw Rs 300-crore being pumped in by PE major Cartica Capital. Both firms did not indicate the stakes picked up by the PE funds.

While the number of deals in 2012 was higher than the year-to-date period this year (see chart), PE investors haven't given up on India's consumption story despite it taking a few knocks in the last few quarters.

Ritesh Chandra, head (consumer group), Avendus Capital, says, "The consumer segment continues to offer attractive stable returns to investors. Demand drivers like increasing rural consumption, shift from unbranded to branded products and an increasing consumption base are likely to lead to significant growth in the coming years. This leads to enhanced PE interest in this sector."

Says C K Ranganathan, chairman and managing director, CavinKare, "In my view, FMCG is still a safe bet. Which is why in an environment like this, where consumers have been deferring purchases on account of inflationary pressures, companies still continue to find investors."

In Vini's case, the company's stellar performance in the last two years appears to have drawn PE players to it. Patel says he has set a turnover target of Rs 200 crore this fiscal riding on brands such as Fogg. Launched in December 2011, Fogg is positioned on the plank 'No Gas, Only Perfume'. It has in the last year-and-a-half made significant inroads in the Rs 2,000 crore deodorant market in India. Patel declined to give market share details of Fogg saying he does not subscribe to Nielsen data.

The brand, however, according to industry sources, has seen good traction in channels such as modern trade despite being priced at a slight premium to rivals. A 100-gram of Fogg is available for Rs 180 in Mumbai in comparison to Hindustan Unilever's Axe, which comes for Rs 150 for the same pack size.