The Bhartia family, led by Shyam and Hari Bhartia of Jubilant Group, is in advanced negotiations with Goldman Sachs to co-invest in a 40% stake in Hindustan Coca-Cola Beverages (HCCB), Coca-Cola’s wholly-owned bottling arm in India, which is among the beverage giant’s top five global markets, according to a report by The Economic Times.
Goldman Sachs plans to fund this acquisition through a Special Purpose Vehicle (SPV), injecting approximately ₹3,000-₹3,500 crore via a convertible preferred equity structure. The Bhartia family is expected to make a similar financial commitment to complete the investment.
Deal Structure and Exit Plan
Goldman Sachs will channel its investment through its Alternatives unit, which focuses on growth and private equity, hedge funds, real estate, and private credit investments. The investment structure involves compulsory convertible preference shares, which are expected to be converted during HCCB’s planned Initial Public Offering (IPO) within the next 2-3 years. The deal includes a 20% internal rate of return (IRR) cap for Goldman Sachs, providing some protection against downside risks. In the repayment hierarchy, Goldman Sachs will rank between senior secured lenders and the Bhartia family’s equity, according to the report.
Coca-Cola’s Strategic Shift to Asset-Light Operations
The sale aligns with Coca-Cola India’s shift toward an asset-light model, mirroring PepsiCo’s successful transition of bottling operations to Varun Beverages, which significantly boosted Varun’s market valuation. The HCCB stake sale is intended to set the stage for a future IPO, potentially establishing a strong market valuation for the bottling company.
HCCB’s Financial Performance and Expansion
In FY24, Hindustan Coca-Cola Beverages posted a 9.2% increase in revenue to ₹14,021 crore, with net profits surging by 247% year-over-year. The company has announced a $1.5 billion capital expenditure plan over the next five years to expand bottling capacity and establish new facilities in Gujarat and Madhya Pradesh.
This strategic partnership could enhance HCCB’s growth trajectory, positioning it well for its anticipated IPO in the coming years.
