Goldman Sachs and Mitsui Global Investments along with other private equity investors have pumped in Rs 315 crore in a home-grown consumer company, Global Beverages & Foods, founded by A Mahendran, former managing director of Godrej Consumer Products Ltd.
The new venture plans to initially launch confectionery, juices, snacks and the products are expected to be available in the next six months.
Despite the dominance of multi-national companies such as Nestle, PepsiCo, Coca-Cola, Britannia, Mahendran believes there is enough potential for a new company to do well.
"The food sector is more than Rs 150,000 crore so there is enough potential for more companies to co-exist. For instance, Britannia and Parle had dominate the biscuit segment for decades but a new entrant like ITC successfully managed to get a share in the pie which shows more players can enter the market," he said.
The company is also open to growth via inorganic route and will look at acquiring strong regional brands in the coming months. The amount that has been raised currently will only be used for working capital and funds for acquisitions will be built later on.
Currently, the company is not even looking at setting up factories and will go for contract manufacturing. "The Indo-Japanese tie-up (with Mitsui) gives us an opportunity to bring global technology in the manufacturing. We will use the technology to develop manufacturing base here and cater to all consumers segments, including premium, medium and bottom of the pyramid," said Mahendran.
He said this is the first time that the private equity investors are pumping in money at the very initial stage. "Generally investors put in money into a company once it is established. But this is the first time that the investors are pumping in money right at the start. This is because they have burnt their fingers via the inorganic route and a direct control and partnership works better."