Whey Finance

yoga bar: ITC joins the fray to buy into Yoga Bar with a check for Rs 150 cr

Food-tobacco consumer conglomerate ITC Limited is in competition with Nestle India to buy Yoga Bar, an 8-year-old health snacks company based in Bangalore, as the company eyes equitable growth, people aware of the development have said.

Dabur, Delhi-based venture capital fund A91 Capital was among those who also looked into the opportunity but were successful. Yoga Bar’s parent company, Sproutlife, has been in the market to raise Rs 150 crore from strategic and financial investors.

“We are engaged in multiple conversations with venture capital funds and consumer companies. We haven’t signed on the dotted line with anyone yet. The two types of investors bring different facets. While the distribution strength of a consumer business adds value to a business like ours, the funds will yield the multiples that fuel the growth potential of the business,” a Sproutlife spokesperson told ET. . “We are evaluating all options but cannot comment on specifics yet.”

The ITC said it declined to comment on the speculation.

The company founded by sisters Suhasini and Anindita Sampath, first raised funds from Fireside Ventures in 2015. The venture capital firm, co-founded by former Helion Venture co-founder Kanwaljit Singh, has invested $3.3 million in the startup from 2015 to 2018, according to VCCEdge, VCCircle’s data and intelligence platform. Elevation joined Fireside in Yoga Bar’s latest fundraising, a Series C, in August 2020. Together, the Sampath sisters own 49% of the company’s equity and are jointly the largest shareholder.

The new investor is likely to become a significant minority shareholder.

The outlines of the deal and the amount of investments are expected to be finalized by the middle of next month, the sources cited above said.

Yoga Bar sells protein bars and muesli and has branched out into peanut butter, whey protein and gluten-free oats.

Mint in its September 20 edition said that Nestlé was looking to take a big bite out of Yoga Bar, which the latter called inaccurate.

Yoga Bar is seeing 100% year-on-year growth and is expected to hit sales of Rs 140-150 crore for FY23, people in the know have said. He expects valuations that represent 4 times his sales. The company declined to discuss its financial figures.

Players like ITC have sought to grow their diverse food portfolio by exploring inorganic ways to further premiumize. Shares of ITC bucked the trend at a 5-year high, gaining more than one percent to Rs 348 apiece on BSE in Thursday’s trading session, when Sensex lost almost 500 points . ITC shares have gained momentum in recent sessions and rebounded 10% in a month, against a 0.2% rise in the benchmark Sensex.

For ITC, “Discretionary/Out-of-home categories such as snacks, beverages, confectionery, frozen snacks, flavors and agarbattis experienced strong growth. Staples and ready meals showed resilient performance, driven by robust growth mainly in Sunfeast Biscuits, Sunrise Spices, Aashirvaad Salt and Aashirvaad Svasti Dairy products,” said Krishnan Sambamoorthy, analyst at Motilal Oswal.

Complementary acquisitions or investments in mid-sized health food and beverage makers have been the main strengths of large consumer packaged goods companies and investors in recent months, in line with consumer preferences. In May of this year, Marico acquired a 54% stake in HW Wellness Solutions, maker of the healthy snack brand True Elements.

Marico said the takeover would help “expand its presence in the healthy food segment.”

Another snack company, Slurrp Farm, raised $7 million from Investment Corporation of Dubai (ICD) and existing investor Fireside Ventures earlier this year. Early last year, Tata Consumer Products bought Bengaluru-based Kottaram Agro Foods, which manufactures breakfast cereals and millet-based snacks under the Soulfull franchise for Rs 155.8 crore.

A recent report by Avendus Capital predicted that the Indian snacks segment would grow to $30 billion over the next five years and predicted that Indian households would double their spending on health-oriented foods and beverages over the next five years. “In 2020, health-oriented food and beverages contributed 11% to the $88 billion packaged food and beverage market in India. This share is expected to reach 16% or $30 billion by CY2026,” the report states.