Private Equity firm True North is set to sell its entire stake in VKL Seasoning, a company involved in seasoning and flavour solutions, to Geneva-based Firmenich —a privately-owned company in the perfume and taste business.
Sources say True North is believed to be selling its entire stake for a three times return. Neither True North nor VKL Seasoning has disclosed the investment and exit details. However, True North, which was earlier named India Value Fund, stated in a 2013 release that it had committed to invest $40 million in VKL.

VKL Seasoning, which was founded in 1996 and the flagship company of the Kanji Morarji group, will retain its brand identity and operate as a standalone business within the company. The firm has a strong focus on the quick service restaurants (QSR) and processed food industries.

The transaction saw significant interest from global players, according to a source close to the deal. “Despite being a B2B business, the customer stickiness is high here because it is a food business — where customers do not want to change vendors frequently. The valuations of food ingrediants companies are much higher. Moreover, this deal witnessed considerable interest from global players, considering the fact that it is difficult to get inroads into Indian firms in this segment. It was a global auction and three entities had been shortlisted towards the end,” the source said.

With this venture, Firmenich is broadening its capabilities and customer reach in India, which it considers a key growth market for the group while expanding its raw material palette for clean label ingredients. Firmenich, which had an annual turnover of 3.7 billion Swiss Francs at the end of June 2018, claims to invest 10% of its turnover in research and development.

Haresh Chawla, partner at True North, said VKL’s impressive customer base coupled with in-depth knowledge of the local palate, has led to significant growth in the industry.
“We synergised our strengths to help the VKL Group add new business and grow revenues 5X over the past five years,” he said.

Patrick Firmenich, chairman of the Board, Firmenich, believes India is a critical market for Firmenich and the firm is committed to investing in its business here, both for short and long-term growth.
“VKL and Firmenich are extremely complementary to one another and together will offer one of the broadest and most innovative portfolios available to food and beverage companies in India.”

Avendus Capital was the advisor to the deal to True North as well as VKL Seasoning.