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Milky Mist funding round receives interest from L Catterton, WestBridge Capital – sources

Milky Mist Dairy Foods, a Tamil Nadu, India-based dairy products maker, is receiving interest from US-based consumer-focused private equity firm L Catterton and India-focused PE firm WestBridge Capital, for a minority equity investment in the company, according to two sources familiar with the situation.

The transaction, which would mark Milky Mist’s first institutional capital raise, is likely to be completed in the coming two to three months, the first source said.

The dairy firm plans to raise growth capital of USD 100m – USD 120m, per a June 2022 local media report.

The company is being advised by Veda Corporate Advisors, as reported by Mergermarket in March. Majority of the proceeds will be used to ramp up the company’s manufacturing capacity and expand into new geographies within India.

The firm is currently entirely owned by founder R Sathish Kumar and his wife, the same report noted.

Milky Mist, L Catterton, and WestBridge Capital did not respond to requests seeking comments.

Milky Mist tried to raise equity capital for expansion in 2017, as per Mergermarket’s report in September of that year. Suitors including Carlyle, Kedaara, TPG, and Sequoia Capital had expressed interest.

The fundraise, however, could not proceed due to a valuation mismatch between the parties, as reported. Spark Capital was running the mandate at that time. 

The bootstrapped startup raised an undisclosed amount in venture debt funding last year from Chennai, India-based investment firm Anicut Capital, per media reports.

Founded in 1992 by T. Sathish Kumar after he joined his father’s milk business, the brand 'Milky Mist' was launched in 1997. Having started off with selling cottage cheese to restaurants in Tamil Nadu, the brand today sells a wide range of dairy products, including curd, butter, cheese, yogurt, desserts, and clarified butter, per its website.

It also plans to foray into new products like dark chocolate and ice creams and has chalked out an INR 10bn (USD 122m) expansion plan for the next three years, per a December 2021 local media report that cited T. Sathish Kumar. The company plans to go public by August 2023, it said.

The firm’s clientele includes Reliance Fresh, Big Bazaar, Walmart, ITC Group of Hotels, Taj Group of Hotels, and Star Bazaar, among others, according to its website. It also exports its products to other regions in Asia.

In June 2021, Milky Mist acquired Bengaluru-based Asal Foods for an undisclosed sum to expand its offerings in the fresh foods segment, as announced. 

For the fiscal year ending 31 March 2021, Milky Mist clocked a topline of INR 10bn, as per its website. It expects to close FY23 with revenues of around INR 15bn, as reported earlier.

Recent deals in the segment include Bengaluru-based dairy-tech startup Stellapps, which raised USD 18m in a Series C funding round led by Nutreco, an animal nutrition and aquaculture company, in October last year.

In February last year, Hyderabad, India-based dairy firm Dodla Dairy, backed by TPG Growth, relaunched its IPO process and appointed Axis Capital and ICICI Securities as book runners for the issue, as reported.