Sequoia eyeing stake in Medimix maker, Cholayil

Talks on for estimated Rs 135 cr of funding to fund expansion

Sequoia India, among the top private equity (PE) and venture capital funds, is looking to invest about $25 million (Rs 135 crore) in Cholayil, the Chennai-based company best known for its ayurvedic range of soaps, Medimix.

In a transaction attracting a good amount of interest from PE and strategic investors, Cholayil is understood to be in the process of taking on board investors likely to add high value to its growth. The four-decade-old company is understood to have yearly revenue of close to Rs 150 crore and wishes to take the brand to the rest of India.

According to information available, the fresh funding will be in an arm of Cholayil which has marketing rights for the Medimix range and for Cuticura talcum powder outside South Indian markets. The Cholayil Group formed two separate companies in 2006, one which has marketing rights for South India and the other for the rest. The southern marketing rights rests with A V Anoop, son-in-law of the founder, V P Sidhan. That for the rest of the markets rests with Pradeep Cholayil, son of the founder. It is understood that Cholayil as a group has yearly revenue around Rs 400 crore.

While Pradeep Cholayil said he would not be able to share details of funding, he had earlier gone on record that his company was looking at around Rs 100 crore of funds through various instruments to fuel growth across North India. Sequoia declined comment.

Medimix, flagship product of the group, contributes almost 90 per cent to the company’s revenue and competes with the likes of Margo, Hamam and Chandrika. Cholayil has gradually been expanding its range of offerings and has a bouquet of products across toiletries, personal care and healthcare products.

Sequoia, with as much as $1.4 billion under management across various stages of investments, has been among the most active PE investors during 2012, with 17 investments. Over the past five years, Sequoia Capital has invested in a little more than 50 companies in India. These include Café Coffee Day, Idea Cellular, Just Dial, Manappuram Finance, Paras, Quick Heal, Micromax, Mu Sigma and Vasan Health Care.

Globally, Sequoia Capital has an impressive track record of partnering with entrepreneurs to create global market leaders. It has been an early investor in companies such as Google, Cisco, Yahoo, YouTube, Oracle, Apple, Zappos, Dropbox, and LinkedIn. Sequoia Capital maintains dedicated teams in US, China, India and Israel.

The fast moving consumer goods sector attracted less than five per cent of the total PE infusion of close to $9 bn (Rs 48,000 crore) invested into Indian companies during the past year. The prominent deal in this segment was $137 mn which Temasek invested in Godrej.