Moreover, as Pantaloon scales up, it has to ensure that its vendors keep pace. Therefore, it often provides them the necessary management and financial support via the group’s private equity initiative, the $400-million Indivision fund. Pantaloon gains from asset management fees and a share of the profits the fund makes.
So far, the limited experience of such investments in companies like Indus League (it owns apparel brands like Scullers and Indigo Nation) and Capital Foods (Smith & Jones ketchup and Ching’s Secret noodles and Chinese sauces) has been promising. Indus League has turned around its loss-making operations, boosting sales five times since investment. Capital Foods is expected to triple sales and profits this year.
Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.