Kochi-based JSF Holdings in talks to sell minority stake

Mumbai: JSF Holdings Pvt. Ltd, an ice cream maker based in south India, is looking to sell a significant minority stake to raise funds for its expansion plans.

The Kochi-based company, which sells ice cream under the Uncle John, Lazza and Skei brands, plans to dilute about 30%, according to two people familiar with the development.

Founded by M.C. John in 1972, the Kochi-based JSF Holdings is the largest ice cream maker in Kerala with more than 75% market share, according to the first person. It’s also present in neighbouring Tamil Nadu, Karnataka and Andhra Pradesh. The Kerala ice cream market is pegged at Rs.450 crore, according to the person cited above.

The company has hired an investment bank to advise it on the stake sale, one of the two people cited above said.

JSF Holdings, which posted a revenue of Rs.350 crore in FY16, is looking to sell the stake at an enterprise value of Rs.1,000 crore, the second person said.

Brothers Francis John and Simon John hold about 50% stake each in the company. Francis John, managing director of JSF Holdings, declined to comment on the stake sale.

In December, Kerala-based Mosons Extractions Pvt. Ltd had sold hair oil brand Indulekha for Rs.330 crore to Hindustan Unilever Ltd (HUL).

According to the first person, the company will use the funds to set up new plants in Karnataka and Andhra Pradesh. Presently, it owns about 26 factories across Kerala, Karnataka, Tamil Nadu and Maharashtra.

Annual per capita consumption of ice cream in India is about 300 ml as compared with about 22,000 ml in the US and about 3,000 ml in China, according to a study by retail consulting firm Technopak Advisors.

Indian ice cream market will expand to Rs.6,198 crore in 2019 from Rs.4,160 crore in 2014, said a study by Euromonitor International released in April 2015.

The Indian ice cream market is dominated by Amul, owned by the Gujarat Cooperative Milk Marketing Federation, with a 32% share. The south Indian ice cream market is dominated by brands such as Lazza, Kwality Walls, Arun Ice Cream and Joy.

To tap the fast-growing Indian market, several global brands had announced their entry plans last year. Nestle-owned premium ice cream brand Mövenpick and Arizona-based Cold Stone Creamery, announced their entry into India, a July 2015Mint report said.

“Each player has a stronghold in their region and as part of expansion, they enter into different states. As the market is growing at 15% annually, there is huge growth potential for organized players and each can acquire certain scale of growth and become a strong acquisition target during the time of consolidation,” said Ankur Bisen, senior vice-president at consulting firm Technopak. Dinshaw’s Dairy Foods Ltd, a leading ice cream maker, plans to raise $100-120 million from private equity firms, Mint reported in October last year. In 2013, Chennai-based dairy company Hatsun Agro Product Ltd acquired Hyderabad-based Jyothi Dairy Pvt. Ltd to expand its business in Andhra Pradesh.