Mexico’s Grupo Bimbo eyes majority stake in Modern Foods business

Mumbai: Mexico’s largest food and bakery company, Grupo Bimbo is in preliminary discussions to acquire a majority stake in Everfoods, the packaged foods platform owned by private equity firm Everstone Capital, two people aware of the development said.
Everfoods predominantly consists of once cult Modern Bread brand that Everstone had acquired from Hindustan Unilever in 2015 along with the bread and bakery business. It also includes other brands such as Cookie Man.

One among the largest baking companies in the world, Grupo Bimbo has presence in 33 countries, selling its 100 plus brands such as Entenmann's, Bimbo, Tia Rosa, Marinela, Barcel, Sara Lee, Oroweat and Arnold Bread. At present, Grupo Bimbo sells bakery brand Harvest Gold in India, which was acquired in 2017 as part of its India entry.

Investment bank Investec is advising Everstone in the sale process. Financial details of the transaction is not known.

Once the deal materialises, the $15-billion Grupo Bimbo will use this platform for a strong foothold in India as Modern Foods has a wide distribution network in the country. Modern Food’s bread and bakery products are manufactured and marketed nationally through a network of over 40 manufacturing plants and more than 80,000 outlets. With a revenue of Rs.400 crore, Modern bread holds about 35-40% market share in Indian bread market.

Modern Foods competes with other bakery brands such as Britannia, Harvest Gold, Nature’s Own and English Oven.

An Everstone Capital spokesperson declined to comment while mail sent to Grupo Bimbo did not elicit any response till the press time.

The Bakery industry in India, under the major categories of bread, biscuits, and cakes & pastries, is valued at $8 billion. The industry is growing at an average rate of 10 per cent since 2015. There are about 2,000 organised bakeries and more than 10 lakh unorganised small-scale bakeries operating in India.

Everfoods had acquired the Modern brand from Hindustan Unilever Limited in 2016. Post Modern brand buyout, Everfoods expanded the presence through multiple buyouts. Last year, Modern Foods had acquired National Capital Region -based Supreme Baker India, which sells Citi Fresh and Topsim Food brands. In 2018, Modern Food had acquired Chennai based Australian Foods India, which sells fresh baked cookies under the Cookie Man brand.

Besides Everfoods, Everstone also owns F&B Asia Ventures Ltd, a pan-Asian platform in the food and beverage space. It owns and operates leading brands such as Burger King (India and Indonesia) and Domino’s (Indonesia), Masala Library, Farzi Café, Pa Pa Ya, Masala Bar, Harry’s, Pind Balluchi, and Duck & Rice.

Everstone also plans to sell part of its stake in Burger King India Ltd, the national master franchisee of the American burger brand in India, through the proposed initial public offering (IPO). Everstone, through its investment vehicle QSR Asia Pte Ltd, owns about 99% stake in Burger King India.

Founded in 2006 by former Goldman Sachs bankers Sameer Sain and Atul Kapur, Everstone Capital currently manages $4 billion of assets under management.

The homegrown private equity fund Everstone has been looking to exit about four more portfolio companies this year.

Everstone Capital plans to sell its Singapore based IT services firm Everise Holdings Inc. in a deal worth $300 million while it has begun discussions with global investors to sell part of its 25% stake in Mumbai-based nutraceutical ingredients player OmniActive Health Technologies.

The fund also plans an exit from Hinduja Group's non-banking financing arm, Hinduja Leyland Finance.