Bharatias looking to raise $1.5 billion to buy 40% stake in HCCB: report

The promoters of Jubilant Group are in alternative discussions with mutual funds and foreign banks to raise ₹12,500 crore ($1.5billion) for the acquisition of a 40% stake in Hindustan Coca-Cola Beverages (HCCB), the bottling arm of the drinks giant, the Economic Times reported, citing people aware of the developments.

The report said family members led by Shamit Bharatia, a non-executive director of Jubilant Industries, are in active discussions with alternative investment managers, including Apollo Global Management, Ares Management, Bain Capital, and Kotak, to raise at least a third of the amount ($475-595 million).

This investment could come in the form of a convertible preference share or convertible debenture. It is likely to be for three years, with a minimum return threshold.

Following in the footsteps of its rival PepsiCo, Coca-Cola is aiming to adopt a lighter asset model similar to Varun Beverages, whose assets have tripled in value within two years. If the beverage giant is planning to list HCCB, negotiating minimum returns on investment will be a key factor for the firms seeking to buy a 40% stake in the bottling company.

Last month, ET reported that the Burman and Bhartia families, promoters of Dabur and Jubilant Group, respectively, were separately bidding for a 40% stake in Hindustan Coca-Cola Beverages (HCCB), the drinks giant’s bottling arm.

The report had then said that the deal would value The Coca-Cola Co.’s wholly-owned subsidiary at ₹27,000-30,000 core ($3.21-3.62 billion).

Jubilant Foodworks holds the exclusive franchise for Domino’s Pizza, Dunkin’ Donuts, and Popeyes in India and operates Domino’s in five other Asian markets. It also owns Coffy, a major coffee retailer in Turkey.