Adyar Ananda Bhavan, a renowned restaurant chain, aims to secure ₹1,000-1,200 crore through private equity funding
Adyar Ananda Bhavan (A2B), the iconic restaurant chain renowned for its delectable southern cuisine, is embarking on a significant financial initiative to raise ₹1,000-1,200 crore by diluting around 35% of its stake. The Chennai-based quick service restaurant (QSR) brand is eyeing a valuation of approximately ₹3,500 crore as it looks to engage with private equity (PE) funds, according to multiple sources. Veda Corporate Advisors will guide A2B in this fundraising endeavor, a strategic move aimed at professionalizing the family-run business. This initiative is not only a step towards modernization but also a prelude to an anticipated initial public offering (IPO) within the next five years, during which the company plans to expand to 400-500 domestic outlets.
Founded in 1979 in Adyar, Chennai, A2B has grown substantially, now boasting about 150 outlets across Tamil Nadu, Karnataka, Telangana, and New Delhi, with additional international locations in the US, UK, and Australia. Despite declining to comment, cofounder KT Srinivasa Raja and Veda representatives have seen feelers sent to domestic and global funds, with an official fundraising process expected to commence soon. The brand’s revenue for FY24 stood at ₹1,500 crore, with an EBITDA of about ₹100 crore, indicating robust financial health and growth potential.
This marks the second attempt by A2B to explore a stake sale, following an unsuccessful engagement with firms like Samara Capital, WestBridge Capital, Carlyle, and KKR in 2016, when the business was valued at ₹1,800 crore. Senior adviser Kavil Ramachandran from the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business highlights the importance of professionalizing family-run businesses for future growth, underscoring the necessity of PE funds in facilitating this transition.
A2B’s journey from a single sweets and savories shop in Washermanpet, Chennai, to a formidable presence in the restaurant industry, demonstrates its resilience and strategic foresight. The brand, managed by the sons of founder KS Thirupathi Raja, expanded into the restaurant segment in 2005 and has since grown to employ 14,000 staff, generating ₹150 crore from packaged snacks alone. Competing with major players like Saravana Bhavan, Sangeetha, and Sree Annapoorna, A2B continues to set benchmarks in the QSR industry.
This trend of southern family-run businesses raising PE funds is not new. In recent years, several have sought external investment to fuel expansion, such as Dindigul Thalappakatti Hotels and KPN Farm Fresh, demonstrating the viability and attractiveness of these businesses to investors. With a substantial market presence and a clear growth strategy, A2B is poised to leverage PE funds to not only enhance its operations but also solidify its standing in the competitive landscape of southern cuisine. This move is a testament to A2B’s commitment to innovation, expansion, and sustained excellence in the food industry.
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Keywords: Adyar Ananda Bhavan, A2B, private equity funds, PE funds, restaurant chain, southern cuisine, Chennai, quick service restaurant, QSR, expansion plans, IPO, family-run business, professionalization, fundraising, Veda Corporate Advisors, KT Srinivasa Raja.