Varun Beverages to tap markets for Rs 7,500 cr QIP in November

Varun Beverages sells PepsiCo licensed products such as soft drinks, fruit juices, energy drinks, packaged water.

Billionaire Ravi Jaipuria’s Varun Beverages Limited, the biggest bottler for PepsiCo in India is planning to raise up to Rs 7,500 crore through a so-called qualified institutional placement (QIP)  to raise funds from institutional investors to strengthen its balance sheet, people aware of the matter told Moneycontrol.

The people cited said that the QIP is expected to be launched sometime next month, once the company’s shareholders approve the fundraising plan and that the funds will be largely used for capacity expansion. Investment banks Kotak Mahindra Capital and Jefferies are advising Varun Beverages on the fundraising, the sources added.

The company is currently in the process of seeking shareholder approval for the QIP. Shareholders have time till November 8 to submit their approval or disapproval for the company’s fundraising plans.

In a notice to its shareholders, the company said that it will use the funds to make  investments in subsidiaries, joint ventures or associates by way of equity, preference capital, or debt, to fund the growth of existing businesses including expanding product portfolio, entering into new territories and making strategic acquisitions.

The funds will also be used for prepayment or repayment of certain loans availed by the company or its subsidiaries

Email sent to Varun Beverages did not elicit a response till press time.

PepsiCo’s biggest bottler in India

Varun Beverages is the second largest franchisee of PepsiCo in the world (outside the US) with operations spanning across 10 countries with franchise rights. In addition, it has distribution rights. In 4 countries

The company sells PepsiCo-licensed products such as soft drinks, fruit juices, energy drinks and packaged water.

PepsiCo brands sold by Varun include Pepsi, Pepsi Black, Mountain Dew, Sting, Seven-Up, Mirinda Orange, Seven-Up Nimbooz Masala Soda and Evervess, Tropicana Juices, Seven-Up Nimbooz, Gatorade and Aquafina.

It also sells PepsiCo’s popular snack brands such as Lays, Cheetos, Doritos and Kurkure. In addition, Varun Beverages also has its own brands, Refreshhh and Cream Bell.

The company has franchisees for various PepsiCo products across 27 states and 7 Union Territories in India and is responsible for approximately 90 percent of the beverage sales volume of PepsiCo India.

It has also been granted the franchise for the territories of Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe.

For the quarter ending September 30, the company reported a 24.1 percent growth in revenue to Rs 4,804.6 crore and a profit growth of 22.3 percent to Rs 628.83 crore.

Record QIPs

The year 2024 has already seen record high fundraising through the QIP route at Rs 86,581.81 crore in the first nine months of the calendar year, compared to the previous record of Rs 80,816.2 crore in the 12 months of 2020, as per data from the primary market tracker Prime Database

Notably, compared to the previous record year of 2020, the QIP fundraising activity in 2024 has been broad-based with 67 companies using the QIP route to raise funds so far this year, as against just 25 companies in 2020.