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Convergent, Sixth Sense back Hindustan Foods
February 28, 2019Bengaluru: Convergent Finance, a PE firm founded by former Fairfax India head Harsha Raghavan, has closed its maiden deal by leading a Rs 100-crore investment in Hindustan Foods, which contract-manufactures products for multinationals like Reckitt Benckiser and Unilever. While Convergent is investing Rs 70 crore in the company, existing backer Nikhil Vora’s Sixth Sense Ventures is putting in the remaining Rs 30 crore.
After the investment is completed, Sixth Sense will hold about 20% stake, while Convergent will have about 10% stake, according to a source familiar with the matter. Sixth Sense had first picked up the stake in the company in 2016. Since then, the valuation of the company has gone up about nine times.
Hindustan Foods was owned by Dempo Group but Vanity Case Group, led by Sameer Kothari, acquired a majority stake in 2013. The company is responsible for manufacturing about a third of Hindustan Unilever’s beverages business, like Bru coffee and Lipton tea. It also works with companies like Danone and US Polo. For Convergent, it is a bet on India’s growing middle-class consumption.
“There is a move from hundreds and thousands of contractors towards more strategic manufacturers in this space and we believe that Hindustan Foods is best placed to capture this. Also, because of GST, the entire dynamics of the industry have changed and we can set up large, automated modern facilities to serve the entire country,” Raghavan told TOI.