A week after annoucing the acquisition deals of Capital Foods and Organic India, Tata Consumer board approved Rs 6,500-crore fundraising plan through commercial papers and rights issue to pay for the deals.
Tata Consumer Fundraising: Tata Consumer approves Rs 6,500-crore fundraising plan through commercial papers and rights issue to pay for recent acquisitions of Capital Foods and Organic India. The company will raise funds through the issuance of commercial papers for bridge funding and issue of equity shares through rights issue. Detailed terms of the rights issue will be announced later. The acquisitions align with Tata Consumer s strategy to become a strong player in the F&B industry with offerings in packaged foods, pantry-platform, cuisines, and organic products.
Tata Consumer s trailing price-to-earnings ratio of 54 times is in-line with industry average, despite having lower pace of sales and profit growth as well as single-digit return on equity
The Tata firm is also said to be picking a controlling stake in Organic India for a Rs 1,800 crore valuation from FabIndia. Fabindia is backed by Premji Invest and Lighthouse Capital, and owns over 40% stake in Organic India, based in Lucknow.