Big deal on Balaja Wafers
Big foreign investment is going to come soon in India’s popular snack brand Balaji Wafers. American private equity firm General Atlantic is in the final stages of buying 7% stake in the company for about ₹2,500 crore. This deal values Balaji Wafers at around Rs 35,000 crore (about $4 billion), which is considered a major step in India’s snack market.
Deal in its final stages, company confirms
Balaji Wafers Founder and Managing Director Chandu Virani said that negotiations with General Atlantic are almost complete and the process of final agreement is going on. Virani said that the deal is final from our side. The GA team is currently reviewing the documents. He also told that the new generation of the company wants to expand the business across the country by bringing strategic capital, hence the decision was taken to sell this part.
General Atlantic moves ahead leaving Kedra behind
Earlier, Balaji Wafers was in talks with investors like Kedar Capital, TPG, Temasek and General Mills. Although Kedra was leading the race, General Atlantic won the deal by offering 7-10% higher valuation.
An ET report said that according to the information, the company does not intend to sell any more stake at this time, but is considering launching an IPO (Initial Public Offering) in the coming time, through which common investors can also get a chance to participate in it.
The story started from the theater of Gujarat
The story of Balaji Wafers is very inspiring. It started in 1982 in a movie theater in Rajkot, where Chandu Virani and his brothers started selling sandwiches and snacks. Today the company has annual sales of ₹6,500 crore and earns a net profit of approximately ₹1,000 crore.
Balaji has tremendous influence in Gujarat, Maharashtra and Rajasthan. The company has about 65% share of the snack market in these states. Despite limited geographical presence, Balaji is India’s third largest snack brand after Haldiram’s and PepsiCo.
Low cost and high quality formula
The business model of Balaji Wafers is very accurate and cost-effective. The company spends only 4% of its revenue on advertising, compared to the industry average of 8-12%. The advantage of less expenditure on advertising was that the company was able to invest more in its production and quality, due to which it could provide the best quality at a lower price.
The company currently has four manufacturing plants and is planning to double them in the coming time, so that it can deliver its products to the rest of the country.
Investors’ interest in regional snack brands is increasing
This investment by General Atlantic shows the growing interest in India’s regional snack brands. These brands have given tough competition to giants like PepsiCo and ITC through their local taste, low prices and rapidly growing e-commerce channel.
Recently, Haldiram also sold its 10% stake to Singapore’s Temasek, Alpha Wave Global and IHC at a valuation of more than $10 billion, which was considered the largest private equity deal in India’s food sector.