Temasek Holdings eyes Actis' stake in Nilgiris Dairy Farm

Sovereign fund Temasek Holdings is in talks with Actis to acquire the latter’s stake in Bangalore-based retail chain Nilgiris Dairy Farm. Sources in the know, however, say a dispute between Actis and the promoters of Nilgiris is likely to disrupt the talks.

Actis, which had acquired a stake of about 51 per cent in Nilgiris for Rs 300 crore ($65 million) six years earlier, had, in the recent past, increased the stake to 67 per cent. Though Actis has been trying to exit the retail chain through a strategic sale, the promoters, the Mudaliar family, is not keen on an exit, it is learnt.

According to media reports, Actis has appointed HSBC to scout for a buyer for Nilgiris Dairy Farm. This, however, could not be verified independently. Actis aims to record huge returns through a strategic sale at this juncture, when a decision on foreign direct investment in the retail segment is expected. Last year, in one of the largest private equity exits in India, Actis had sold its 63 per cent stake in Paras Pharma to Reckitt Benckiser for about $726 million. It had acquired the stake for $150 million in 2006.

A Temasek spokesperson said, “As a matter of policy, we decline to comment on market speculation.” J M Trivedi, head (South Asia) of Actis, said the company did not comment on market speculation.

Though Actis is trying its best to resolve differences with the Mudaliar family, the latter has clarified it isn’t interested in selling its 33 per cent stake in the company.

Temasek Holdings is expected to increase its investment in consumer-focused Indian companies. At a recent press briefing, Rohit Sipahimalani, head of Temasek India, had said the Indian consumption story remained intact. He added Temasek was keen on this segment. Early this year, Temasek had acquired 4.9 per cent stake in Godrej Consumer Products for Rs 685 crore. The company has also invested in Bharti Airtel, Tata Sky, the National Stock Exchange, GMR Energy and Tata Teleservices.