The Bhartia family, led by brothers Shyam and Hari, is in advanced negotiations with Goldman Sachs to acquire a 40% stake in Hindustan Coca-Cola Beverages (HCCB), Coca-Cola’s wholly-owned bottling arm in India. Goldman Sachs is expected to finance the deal through a convertible preferred equity instrument worth INR 3,000-3,500 crore.
Investment to route via Goldman Sachs Alternatives
According to sources, the Bhartia family will also invest a similar amount, with Goldman Sachs capping their upside on the investment at 20% IRR with downward protection. The investment will be routed through Goldman Sachs Alternatives, the firm’s growth and private equity arm.
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Meanwhile, the deal is seen as a precursor to HCCB’s initial public offering (IPO), expected within two to three years. Coca-Cola aims to replicate rival PepsiCo‘s asset-light model, outsourcing bottling operations to unlock value.
“Hindustan Coca-Cola Beverages is lining up a $1.5 billion capital expenditure program over five years,” a source revealed. “This includes plans to invest INR 3,000 crore in a juice and aerated drinks facility in Gujarat and INR 350 crore in a new plant in Madhya Pradesh.”
HCCB reports revenue jump to INR 14,021 Cr
Further, HCCB reported a 9.2% jump in FY24 revenues to INR 14,021 crore, with net profit soaring 247% to INR 2,808.3 crore. The company operates 13 factories across India, manufacturing 37 products across eight categories.
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Additionally, the Bhartia family, known for their pizza-to-pharma conglomerate, has been in discussions with alternative asset managers and foreign banks to raise over $1 billion in financing.
“Goldman Sachs is betting on growing beverage consumption in India,” a source said. “The firm’s alternatives platform has backed several high-growth companies in India, including Biocon Biologics and API Holdings.”
In a recent development, Morgan Stanley is advising the Bhartia family on the debt capital raise from mutual funds, running parallel to the Goldman negotiations.
