With a view to fortify its presence in the ₹45,000 crore , nutrition-led healthy foods space, diversified conglomerate ITC Ltd has invested in Sproutlife Foods Private Ltd (SFPL), a Direct-to-Consumer (D2C) start-up engaged in the manufacture and sale of products catering to health-conscious consumers under the brand ‘Yoga Bar´.

ITC will acquire 100 per cent of SFPL over a period of three-to-four years; while close to 47.5 per cent stake in the start-up will be acquired, in tranches, by March 31, 2025; the balance stake will be acquired, on the basis of pre-defined valuation criteria, subject to other conditions agreed to in the binding documents, the company said in a press statement. The estimated cost of acquisition is likely to be little over ₹400 crore, market sources said.

Investment plan

The initial Investment of ₹175 crore will be made through primary subscription and secondary purchases for acquisition of 39.4 per cent of the paid-up share capital on a fully diluted basis, which is expected to be completed by February 15, 2023 or such other later date as may be mutually agreed upon. Further infusion of ₹80 crore will be made through primary subscription, in one or more tranches, by March 31, 2025 or such other later date as may be mutually agreed upon, based on pre-agreed pre-money valuation.

Purchase of balance shares taking the shareholding in Sproutlife to 100 per cent of the paid-up share capital on a fully diluted basis would be determined based on pre-agreed valuation criteria, within three months from the date on which it provides the audited financial statements for the financial year ending March 31, 2026 to ITC in terms of the transaction documents and subject to fulfilment of various terms and conditions, ITC said in a regulatory filing on Tuesday. SFPL had a turnover of ₹68 crore in 2021-22.

“The company has signed a binding term sheet on January 16, 2023, to acquire 100 per cent of the share capital (on a fully diluted basis) of Sproutlife Foods Private Ltd, an Indian company primarily engaged in the business of manufacture and sale of food products under the trademark Yoga Bar, subject to execution of transaction documents setting out the terms and conditions on which the proposed acquisition will be consummated,” it said.

Yoga Bar, which has a product portfolio including nutrition bars, muesli, oats and cereals, currently has a high salience of on-line sales (D2C, e-commerce platforms etc.) with growing presence in offline stores. The acquisition will enable ITC to augment its future-ready portfolio and enhance market presence in the ‘Good for You’ space which currently includes Aashirvaad Multi-Grain Atta, Aashirvaad Nature’s Super Foods, Farmlite range of biscuits, Sunfeast Protein Shake, B Natural Nutrilite ABC Beverage among others.

Yoga Bar is expected to be rapidly scaled up, leveraging ITC’s enterprise strengths in areas such as sales and distribution, sourcing, product development, and digital.

 “We believe that this investment is an exciting opportunity that aligns with ITC’s Foods Business’ aspiration to build a formidable portfolio in the nutrition-led healthy foods space. We look forward to scaling the Yoga Bar brand offering superior and healthy consumer choices. Within a short span of time, Yoga Bar has established itself as a leading brand in the healthy foods space, driven by impactful market positioning and a range of innovative products,” Hemant Malik, Divisional Chief Executive, Foods Division, ITC said, in the statement.

Suhasini Sampath Kumar and Anindita Sampath Kumar, co-founders, said, “We are delighted to join hands with ITC in Yoga Bar’s next phase of growth. ITC has a long history of building world-class brands, leveraging its core competencies which encompass superior understanding of the consumer, strong backward linkages with agri supply chain and a deep and wide distribution network. We are confident that this partnership will add to Yoga Bar’s competitive advantage and take it to the next level from the current annualised run rate of over ₹100 crore.”