“The final binding bids are expected to be in towards the end of the month or early next month. The deal is likely to close next quarter,” said one of the people.
The dairy and fresh foods company has appointed Chennai-based investment bank Veda Corporate Advisors to help it with the funding process.
Spokespersons for Temasek and Veda Corporate Advisors declined to comment. Spokespersons for Multiples, Kedaara, True North, TA, ChrysCapital and Milky Mist did not respond to emailed queries till press time Sunday.
Milky Mist was set up by T Sathish Kumar, a high school dropout hailing from a family of farmers, in 1992. It began with selling milk and has entered value-added products such as milkshakes, flavoured yogurt, butter, cheese variants and UHT products. The company has a 55-acre plant in Perundurai, Tamil Nadu, and supplies through a retail network of more than 1,50,000 outlets.
It has tied up with 60,000 dairy farmers to process 1.5 million litres of milk each day. It generates annual revenue of Rs 1,300-1,400 crore, the people said.
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“The company expects a valuation multiple akin to FMCG companies,” said a second person directly involved in the deal. According to this person, the company is profitable, and the deal is gaining a lot of traction from consumer-focused funds.
“The company currently has a strong presence in southern India and with its plans to become a pan-India brand, it needs capital to scale,” said another person with knowledge of the company’s plans. “It will look at raising $100-150 million given the inbound interest and is likely to sell a significant minority stake in an entirely primary round,” he added.
Milky Mist, which has been bootstrapped, had previously raised debt from Anicut Capital, a venture debt fund.
The organised dairy and fresh food sector is gaining momentum with investors. The dairy sector is set for the second straight fiscal year of double-digit revenue growth at 11-12%, a notch below last fiscal’s 13% growth, according to
Ratings. The growth is driven by healthy demand for value-added products (28% of overall sales), even as sales of liquid milk stay steady and the full-year benefit of retail price hikes implemented last fiscal year is realised. Within value-added products, strong recovery is expected in the demand for cold VAP such as ice-cream, curd and flavoured milk, ET reported last month.
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