InvestorQ : Why did the PE firm pick up a stake in ADF Foods?
Dawn Cherian made post

Why did the PE firm pick up a stake in ADF Foods?

Mitali Bhutta answered.
2 years ago

It has recently been reported that Convergent Finance, a private equity firm, has purchased a 10% stake in ethnic Indian packaged food maker ADF Foods for Rs.100 crore. This stake was picked up from the existing shareholders of the company. Convergent is founded by Harsha Raghavan, former fund manager of Prem Watsa, the Canadian investor.

ADF is focused on ready-to eat or RTE food offering items. It also has ready-to-cook or RTC products like sauces, pickles, pastes, dips and frozen foods. ADF products are available in over 50 countries across North America, Europe, Australia, Asia and Middle East, where there is a significant Indian population and hence demand for such ethnic food.

ADF Foods is a family-owned fourth generation business. Some of the family members had expressed the intention to exit and that is what had brought Convergent Finance into the picture. Raghavan underlined that Convergent would only be keen to have a long-term relationship with the company and support its plans to expand in future also.

For the first half of fiscal 2021, ADF Foods reported revenues of Rs.171 crore, compared to Rs.135 crore in H1FY20. The growth came across a broad range of food segments. Nearly 99% of the products of the company are exported so adherence to stringent quality standards comes automatically to the company.