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Last Updated : Mar 21, 2019 06:20 PM IST | Source: Moneycontrol.com

VG Siddhartha, the trader who made a fortune from Mindtree stake sale

Siddhartha’s background as an investment banker probably came in handy when he pitched in time and again, when Mindtree needed it.

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VG Siddhartha has been in the news for selling his stake in Mindtree to L&T, which then mounted the first hostile takeover in Indian IT industry.

Some may know the 58-year-old entrepreneur more as the founder promoter of Cafe Coffee Day, one of the largest coffee chains in the country.

But before all this, Siddhartha was an investment banker and trader.

Siddhartha, who was born in Karnataka's Chikkamagaluru, started his career as a management trainee trading in Indian stock market at JM Financial under the tutelage of Mahendra Kampani in 1983, after completing his masters’ degree in Mangalore University in Mumbai.

He later bought Sivan Securities in 1984 and turned it into a highly successful investment banking and stock broking company. It was renamed to Way2Wealth Securities in 2000.

It was only in 1992, that Siddhartha started his coffee business Amalgamated Bean Company Trading (now called Coffee Day Global), an integrated coffee business which ranges from procuring, processing and roasting coffee beans to retailing of coffee products. The company’s revenue stands at Rs 2,016 crore for FY18.

After the success of coffee, Siddhartha launched India’s first coffee café -- Café Coffee Day -- on Brigade Road, Bengaluru in 1996. Since then, the company has grown to be one of the largest café chains in the country with 1,751 outlets in 250 cities. The company has outlets outside India as well.

Internationally, CCD outlets are present in Vienna, Czech Republic, Malaysia Nepal and Egypt.

In an interaction with Economic Times in 2006, Siddhartha attributed the success of his coffee trading business to this:

“Part of the credit goes to ABCTL’s meticulous processing where our in-house laboratory supports quality control at every stage to ensure the best cupping quality. The quality of our roasting plant and processing equipment is matched by the excellence of our brewmasters who are the best in the country.”

Mindtree journey

In 1999, IT veteran Ashok Soota roped in Siddhartha when the 10 founders including Subroto Bagchi, Rostow Ravanan and KK Natarajan were putting together Mindtree.

According to a CNBC-TV18 report, Siddhartha has invested Rs 340 crore for stakes in Mindtree since 1999, and by selling his 20.4 percent stake to L&T, he has taken home a massive profit of nearly Rs 3,000 crore after 20 years.

Siddhartha’s background as an investment banker probably came in handy when he pitched in time and again when Mindtree needed it.

Siddhartha invested close to Rs 44 crore to buy a 6.6 percent stake in Mindtree that was just starting up in 1999. In 2011, he picked up another 5.57 percent and 2.05 percent stakes for Rs 85 crore and Rs 40 crore, respectively. Later in 2012, he invested Rs 171 crore to buy an additional 6.84 percent stake in Mindtree. This translates roughly into an internal rate of return of 20.43 percent per annum.

Apart from the coffee business, the Coffee Day group acquired SICAL Logistics, Tanglin Developments (which has Global Village tech park) and Coffee Day Hotels & Resorts.

With the Mindtree stake sale helping him to clear debts, Siddhartha may perhaps don the role of an investor, again.
First Published on Mar 20, 2019 04:45 pm
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