The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
It had finalized a new management team led by ParryÆs Confectionery MD, NC Venugopal to run the business. The deal was widely presumed to be only the formality of final signing away from closure. However, a sudden volte face by the owners, speculated to have been caused by differences within the seller family on valuation, left Actis with no choice but to walk away.
ActisÆ success in wooing the Nutrine owners was seen as a coup of sorts. This would have represented the first MBIs (ômanagement buy inö) in IndiaÆs growing fast moving consumer goods ("FMCG") sector and one of only a few to have been consummated in the country.
At an estimated Rs2.75 billion ($62 million) the Nutrine deal was also touted as the largest FMCG deal in India in 2005. Actis, an ative player in India's private equity space, has closed two of the MBOs the country has witnessed, Punjab Tractors and ICIÆs nitro cellulose division. Actis has also invested in UTI Bank, HDFC, Jyothy Laboratories and others.
The more than 50 year old Nutrine (it was started in 1952) has been on the radar screen of strategic acquirers for over a decade since Nestle tried to forge an alliance with the company in the mid-nineties. After that the Murugappa group, then owners of ParryÆs Confectionery, had shown interest in Nutrine.
While exploring a foray into confectionery, UnileverÆs Indian subsidiary, Hindustan Lever had considered an investment in Nutrine. Most recently in 2003 closely held Mars (whose brands include Mars, Twix, M&Ms) made an overture to Nutrine which was rebuffed.
Other players in the confectionery market in India include Nestle, Cadbury, Perfetti, Lotte (in 2004 the Murugappas sold ParryÆs Confectionery to Lotte Korea). Nutrine registered a turnover around Rs2 billion in fiscal 2004-05.
It is attractive to acquirers and private equity investors alike because it is one of the only remaining domestic players with a large turnover, established brands and distribution and an estimated 25-30% market share in value terms in an otherwise fragmented market.
About one third of the market is still in the unorganized sector. Nutrine is also attractive because some of its brands eg the ôNutrine +clairö and ôMaha LactoÆ are individually more than $10 million brands.
The deal was perceived as sewn up to the extent that statistics compiled eg Grant ThorntonÆs Deal Tracker had included the Actis-Nutrine deal in the last quarter of calendar 2005. After investing more than nine months of effort (including identifying and persuading a new management team), this is an unfortunate end to ActisÆ efforts. At an industry level it draws attention, yet again, to the difficulties involved in closing private equity deals on the Indian subcontinent specifically and Asia in general.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
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Norway's Oil Fund welcome Chinese proposals improving transparency and shareholder protection; HK's MPF assets surge 35% year on year; Korea's NPS commits $100m to TPG consortium to invest in taxi-hailing app; Poba commits W270bn to European property; Malaysia's EPF sees investment income rise 59% year-on-year in first quarter, and more.