Tata Global Beverages taps PE firms for stake sale

Last Updated: Tue, Nov 09, 2010 20:00 hrs

Tata Global Beverages (formerly Tata Tea) is in talks with private equity firms for raising funds through dilution of a minority stake.

The dilution – that could be at the holding company level or in the UK subsidiary, Tetley – is likely to be 10-12 per cent. UK-based investment bank Rothschild is advising Tata Global Beverages.

"The funds raised can be used for future acquisitions," an official close to the development said. The company is understood to be in talks with PE biggies Blackstone, Advent and Bain Capital.

"Tata Global Beverages is constantly evaluating different options for value creation. At present, there is no specific proposal that has even been placed before the board so we have nothing further to comment," a company spokesperson said.

Blackstone India Managing Director Akhil Gupta said the firm was bound by a confidentiality agreement and could not comment either way. Advent PE and Bain Capital could not be reached for comment.

Tata Global stock today closed at Rs 127.45 on the Bombay Stock Exchange.

If the deal is successful, Rothschild will explore similar value unlocking and restructuring in global subsidiaries across the Tata group.

The fund infusion was aimed at powering Tata Global’s growth plans, which entails achieving revenues of $5 billion in the next five years from the present $1.5 billion. The growth will come from its existing brands and acquisitions, which could even be in the foods space.

Tata Global has grown through acquisitions over the years. The biggest being Tetley, in 2000, at £271 million. Rothschild’s mandate also includes paving the roadmap for Tata Global’s portfolio of many brands — global and regional. While Tetley and Tata Tea are the driving force, a range of brands like T!on, Good Earth and SUKK jelly drink is being pushed into different markets.

Tata Global has identified its core global brands – Tetley, Tata Tea, Good Earth and Himalayan – but has made sure that the regional brands are also growing. The regional brands include: Eight O’Clock Coffee (USA), Jemca (Czech Republic), Vitax (Poland), Tata Tea Agni (India), Chakra Gold (India) and T!on (India).

The company has also formed a 50:50 joint venture with Pepsi Co Inc, USA, for non-carbonated ready-to-drink beverage focused on the health and enhanced wellness segment.

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