Private equity firm WestBridge Capital has picked up a majority stake in Tamil Nadu-based fruits and vegetable retail chain KPN Farm Fresh, sources said, as it seeks to double down on its bets in the India consumption and retail theme.
KPN, which stands for Kovai Pazhamudhir Nilayam, is one of Tamil Nadu’s most ubiquitous fruit and vegetable retail chains. Its rise from a single pushcart in Coimbatore to a thriving business that is still run by a family is the stuff of entrepreneurial legend and tenacity.
Moneycontrol learns that the deal values KPN at Rs 800 crore, with WestBridge picking up a nearly 70 percent stake in an all-cash deal for about Rs 550-600 crore. The remaining 30 percent will stay with the promoters, and Senthil Natarajan, the current Managing Director, will continue to the run the operations.
The chain is said to have revenues of Rs 400 crore and is profitable. While it currently has stores across Tamil Nadu, it is looking to expand in other southern states as well. The deal was concluded a few weeks ago.
A market source said Veda Corporate Advisors were advisors for the transaction. While WestBridge and Veda did not respond to queries, KPN MD Senthil Natarajan said he had no comments to offer.
KPN’s journey began in the 1960s in Coimbatore when Senthil’s father R Natarajan, the second of four brothers, dropped out of school to sell fruits with his older brother, to support his family, after losing their father, who was the only income producer.
The two brothers used his savings to open his first store in the year 1965, with an investment of Rs 300. The shop was named ‘Pazhamudhir Nilayam’. It pioneered the concept of fair, fixed prices and sold items by their weight instead of by the dozen.
The two brothers, also initially, sold fruit juice, when they saw a slump in sales. The juice was however, just pulp with no added water and thus it attracted customers to eventually buy fruits, according to a report by The News Minute, which profiled the two brothers.
In 2012, they formally established KPN Farm Fresh with 60 percent stake in the company, while the balance was distributed among partners in existing KPN outlets, according to another media report.
The company has one 20,000 square feet warehouse in Coimbatore and another 1.5 lakh square feet warehouse located in Vanagaram, on the outskirts of Chennai, according to The Weekend Leader report.
WestBridge Capital’s move, meanwhile, to buy a majority stake in KPN Farm Fresh comes at a time when the private equity firm, one of the most active startup investors in India, has slowed the pace of deploying capital, amid deteriorating macroeconomic climate. The PE has just participated in one deal so far this year while it invested in 25 companies in 2022.
But, the private equity firm has a few consumer technology companies dealing in the food and beverages space on its portfolio like VnF and Fraazo on its portfolio. According to sources WestBridge is also close to investing in Milky Mist, one of the largest manufacturers of dairy products.
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