The Indian franchisee of international pizza chain Papa John's, Om Pizzas and Eats is in talks with investors to raise around $25 million (about 142 crore) in equity funding, as per a media report.
Existing investor TVS Capital, which owns about 80% of the company, will continue to remain invested. It is spearheading the capital raise, but will not be participating in this round. "TVS had invested in Om Pizzas and Eats from its first fund, which is now fully exhausted. Hence, they are looking only at outside investors," said the source, who did not wish to be identified.
Penetration has not gone beyond the main urban centres, so there is more potential for growth," said Ankur Bisen, vice-president of retail at Technopak.
Other players are also stepping up investments. Pizza Corner India raised 40 crore from its Geneva-based parent company Global Franchise Architects (GFA) in May. Joseph Cherian, CEO of GFA Global, had then said that it was India's rapidly-growing pizza market that led to the investment. Domino's Pizza is the largest player in the Indian pizza market, with 552 stores across 118 cities.
Om Pizzas aims to raise the current round of funding at a valuation that is 2.5 times its current revenue.
There are 22 Papa John pizza outlets in India, with each store earning an average revenue of 1.25 crore annually. "Businesses in the food sector command a valuation of 1.5-2.5 times of revenue. Indian subsidiaries of international chains do command higher valuations," said an investor, who has previously invested in the food sector, but did not wish to be named.