Ching's Secret noodles maker eyes IPO as stake sale talks stumble on valuations

Capital Foods was founded by Gupta in 1995. Kishore Biyani, Chief Executive Officer (CEO) of Future Group, was the first external backer of the firm.

Capital Foods Limited, the maker of Ching’s Secret noodles, is considering an initial public offer (IPO) after talks with potential buyers to offload a controlling stake in the company remained inconclusive even after several months of negotiations, sources aware of the matter told Moneycontrol.

According to the persons cited above, Mumbai-based Capital Foods, which is owned by Invus Group, General Atlantic, and founder chairman Ajay Gupta, has remained engaged with potential suitors that include a clutch of large domestic and foreign fast-moving consumer goods (FMCG) companies. However, talks have slowed down lately over mismatches in valuation expectations. "Alternatively, the owners feel that a public market listing will help realise better valuation,” said one of the persons cited above. Email queries sent to Capital Foods, General Atlantic and Invus Group did not elicit a response till the report was published.

Capital Foods sells a wide variety of Chinese and Italian food products, including Ching's Secret instant Chinese noodles, soups, condiments, curry pastes, and frozen entrees, as well as the Smith & Jones range of ginger garlic paste, sauces, and baked beans.

According to reports, the company first decided to offload a controlling stake in 2022 and, since then, has been in negotiations and received interest from Tata Consumer Products Ltd (TCPL), Nestle SA, and Kraft Heinz Co, among others. Reports suggest that the company was seeking a valuation of $1.5 billion (Rs 12,442 crore). The Economic Times reported in September that TCPL was in the final stages of negotiations to acquire 65-70 percent of Capital Foods Pvt Ltd at a valuation of Rs 5,500 crore.

TCPL was to initially purchase the stake from three investors, with an option to acquire the remaining stake in the future, the report said. The sale process has attracted interest from several multinational and homegrown companies, including ITC, Hindustan Unilever, Orkla, Nissin Foods, and McCormick, the report added.

Capital Foods was founded by Gupta in 1995. Kishore Biyani, Chief Executive Officer (CEO) of Future Group, was the first external backer of the firm. He had bought a 33 percent stake in the company for Rs 13 crore and exited it in 2013. General Atlantic came on board in 2018.

The domestic Chinese food market is expected to register a compounded annual growth rate (CAGR) of more than 15 percent, and according to industry estimates, the highest share is expected to be of Chinese sauces. It is expected to generate a revenue of around Rs 500 crore in the financial year 2022-23 as per industry estimates.