Private equity firm KKR has made up to Rs 520 crore of structured finance investment in Kwality, a private dairy company in India.
The six-year senior secured loan was made by KKR’s non-banking financial company (NBFC) in India. The return of the investment is expected to be above mid-teens, sources close to the deal told PDI.
The proceeds will be used to further strengthen milk procurement infrastructure value-added product categories including cheese, paneer, table Butters, tetra-packs, flavoured milk and yoghurt, among others. The company intends to roll out a series of such products soon.
The rest of the capital raised will be used on the repayment of debt to improve cash flows and augment brand building activities.
“We are in a critical stage of growth where we are shifting our business model from B2B to B2C…” said Sanjay Dhingra, the managing director of Kwality, “This investment would support a giant leap in this direction enabling faster growth and achieving high profitability. Further, I believe KKR’s strong pedigree and rich experience combined with our management capabilities is going to unlock significant value and will benefit all stakeholders.”
ICICI Securities PD is the financial advisor on the transaction.
KKR has previously tapped the dairy business in Asia. It bought stakes in China Modern Dairy in 2008 and had tripled its investment upon its exit in 2014.
Kwality Limited is India’s largest and fastest growing private dairy company. It has six milk processing units in Uttar Pradesh, Haryana, Uttarakhand and Rajasthan with a processing capacity of over 3.2 million litres/day. The company caters to its retail customers and supplies dairy products to institutional customers directly.