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French luxury group LVMH has taken a shine to Baba Ramdev’s Patanjali Ayurved Ltd. “We would love to work with him if we can find a model,” said Ravi Thakran, managing partner, L Catterton Asia. However, “I know his model is not to work with multinationals and with foreign money.”
The L Catterton private equity fund co-owned by LVMH is ready to bet $500 million — almost half of its remaining Asia fund—to buy a stake in the enterprise that has emerged as one of India’s biggest fast-moving consumer goods (FMCG) companies with a range of ayurveda-based products in the past few years. This has forced global and local rivals including Hindustan Unilever BSE 0.91 %, Colgate Palmolive BSE 0.70 % and Dabur to ramp up their ayurvedic portfolio.
“Patanjali has the potential to go to the world and I can tell you today that Patanjali has been a disruptor in its category, as strong a disruptor as many of the global disruptors are and it has taken Indian-ness and celebrated it with pride,” Thakran told media. Patanjali could sell its products in markets such as the US, Japan, China, South Korea and Europe and L Catterton could help in that effort, he said.
Getting a stake in the company doesn’t look like a possibility, although Patanjali is looking for funding. Ramdev has positioned himself and Patanjali as anti-multinational, taking a swadeshi tack that has propelled the company to the top ranks in the past few years.
Patanjali chief executive Acharaya Balkrishna said the company isn’t looking to dilute equity but is seeking about Rs 5,000 crore in loans in “Indian currency” at rates that are lower than those offered by banks. He said UBS has lined up meetings with several foreign investors to this end. “We will not give stake to anyone,” he said.
“The world moves with help from one another and if somebody wants to help us then it has to be within the radius of our conditions,” he told ET over the phone. “We won’t accept any money in equity or shares but when the country is using foreign technology for progress and if foreign money comes and gives us on our conditions we will accept.”
Thakran said Patanjali’s current valuation could be at least $5 billion, adding that L Catterton could help the company build its brand outside India.
“I would welcome a chance to meet Baba Ramdev and tell him this is a case of not just being an Indian leader but a global leader. This company genuinely has a chance,” Thakran said. “They maybe per se against multinationals encroaching into their lives and, therefore, their theme to go Indian is agreat one.”
“But they may not be averse to seek help from great brand builders to build their brand better and to tell the story better and we want to celebrate the same Indian-ness better. It would be great to find a marriage.”
Balkrishna said the company is in immediate need of ?5,000 crore to set up plants in Nagpur, Greater Noida, Assam, Chhattisgarh, Andhra Pradesh, Telangana, Haryana and Rajasthan and for the cultivation of aromatic and herbal plants on 10,000 acres of leased land in Arunachal Pradesh.
“We are getting loans from the banks without any problems. My condition is that if any fund is looking to support us, they should give us loans with interest lower than the banks and in Indian currency,” he said.
“There are lots of people lined up for stake purchase. I won’t say hundred but I have already met dozens of potential investors.”
L Catterton Asia has a corpus of $1.25 billion and the company generally invests in the range of $100-200 million per company but is prepared to bet as much as $500 million on Patanjali.
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