- TPG Capital is a private equity fund.
- The promoter had already planned to restart talks with Coca-cola on selling their stake in the chain.
- Coffee Day Enterprises Ltd owns about 89.6% of Coffee Day Global.
TPG, a private equity fund, is in primary talks for a possible acquisition of Coffee Day Global which runs Cafe Coffee Day across the country. Although the talk is at the very preliminary stage, this could greatly change the way the current coffee day outlets work.
A TPG spokesperson, however, declined to comment and so did the Coffee Day Enterprises Ltd (CDEL). The promoter had already planned to restart talks with Coca-cola on selling their stake in the chain.
Coffee Day Enterprises Ltd owns about 89.6% of Coffee Day Global, that houses a chain of more than 1,750 stores across India with nearly 600 Value Express Kiosks and about 60,000 vending machines that dispense coffee in various workplaces and hotels under the brand name. It is also comprised of coffee beans and powder which is being marketed through 450 Fresh and Ground Coffee retail stores.
Talking about the debt, Coffee Day Global has a huge debt of about Rs 1,100 crores. Coffee Day Enterprises Ltd also owns majority stakes in various companies such as Coffee Day Global Ltd, Tanglin Development Ltd, Sical Logistics and Magnasoft Consulting among others.
The divestment is mainly aimed at making the group debt-free and also releasing liquid cash. Last month, Coffee Day Enterprises Ltd announced that the gross debt on its accounts was Rs. 4,970 crores. In addition to this, there is also some debt in the promoter’s holding company. The family currently owns about 54% of Coffee Day Enterprises Ltd where 75.7% of the stake has been pledged.
Coffee Day is under pressure after its founder V.G. Siddhartha took his own life as debt strains in his businesses started to appear.
A unit of private equity firm KKR & Co. owns 6.07% of the company. Standard Chartered Private Equity holds 5.7%, while Nandan Nilekani, co-founder of Infosys Ltd., has a 2.69% stake.
Chikkamagluru-based Coffee Day Enterprises in Asia is the largest producer of Arabica coffee beans. It grows coffee on 20,000 acres of self-owned estates and set up the first cafe in 1996 in Bengaluru. CCD has expanded through many cities in India joining new stores with more than 1700 cafes, ten times more than Starbucks Corp., open across the nation with 60,000 vending machines by 2019. It has also expanded outside India with its outlets in Austria (Vienna), Czech Republic, Malaysia, Egypt, and Nepal.
ITC looks at buying stake in CCD following cafe chain founder’s death
