Lal Sweets looks to raise $40 mn from PE investors at $175 mn valuation

The company, which sells sweets, cookies and savouries, has received a term sheet from the private equity arm of Motilal Oswal Group, one of the persons cited above said.

“The fundraise is a mix of primary and secondary capital, with the promoters selling some stake," the person added.

The company has appointed investment bank Veda Corporate Advisors to help with the fundraise. This is the first time the company is looking to raise external capital since its inception in 2010.

“Motilal Oswal PE is doing due diligence," the second person cited above said.

While Veda and Motilal Oswal did not respond to Mint’s requests for comment, Lal Sweets’ managing director, Prateek Athwani, declined to comment on the developments.

Founded by Athwani in 2010, the Bengaluru-based company has exposure across general trade, modern trade, online marketplace, exclusive airport outlets and the export market. Lal Sweets is known for its Mysore Pak, Besan Laddoo, Kaju Katli and Dharwad Peda sweets, as per the company’s website.

According to the third person cited above, the capital will help the company expand into newer product categories like healthy snacking options, instant mixes, and frozen ready-to-eat options. “While Lal Sweets is currently a profitable company, it is focused on improving its revenues in the near-term," the third person said.

Spreading wings

Lal Sweets is prominent in southernIndia apart from Delhi NCR in the north. Besides doubling down on its existing geographies, it is looking to deepen its focus in northern India and cater to international demand. 

Lal Sweets ships its products to countries with a large Indian population, such as the US, Singapore, and West Asia.

In 2022-23, Lal Sweets’ total revenue grew nearly 40% to ₹85 crore from a year earlier, according to its latest filings sourced from Tofler. It posted an annual profit of ₹14 crore, swinging from a loss of ₹2 crore in FY22.

Also Read: Urban folk reluctant to give up sweets, says survey

The broader snacking industry has been witnessing sustained momentum in recent times with several new-age startups snapping up funds from investors. 

Recent examples include Fireside Ventures’ $1.5 million investment in Chennai-based snacking brand Sweet Karam Coffee in October, Farmley’s $6.7 million fundraise from a group of investors led by BC Jindal Group in December, and direct-to-consumer snacking brand Adukale’s $1.3 million fundraise led by Force Ventures in April.

Mint also reported in May that private equity firms Blackstone, Temasek Holdings and Bain Capital were evaluating a controlling stake in sweets-and-savouries maker Haldiram Snacks Food Pvt. Ltd. The investors were looking to buy at least a 51% stake in the company at a valuation of $8-10 billion, people in the know said.