PE firm CX Partners buys majority in TN biryani chain

BENGALURU: Private equity firm CX Partners is picking up a majority 50.1% stake in Dindigul Thalappakatti Biriyani for Rs 260 crore in what will be one of the largest investments in a local restaurant chain brand in India. The deal with the iconic Tamil Nadu restaurant will value it at nearly Rs 600 crore. It includes a share purchase from promoters besides fresh capital infusion for expansion.

The funds will be used by the promoters of Dindigul Thalappakatti to expand in metros across India and also overseas. The latest investment by CX Partners, which has also funded chains like Barbeque Nation, will help professionalise the management. Advay Capital Advisors was the investment banker for the deal.

The chain is now being run by 37-year-old D Nagasamy, whose grandfather started it. Nagasamy will continue to run the operations. After returning with an MBA in hospitality management from London in 2009, he started expanding the popular but still one-outlet operation (see graphic). “We are not attracting only Tamil diaspora, but all South Indians. The US is the biggest market because our only restaurant in Milpitas in California generates over Rs 2 crore in monthly revenues,” said Nagasamy.

With more capital, the plan is to take the number of outlets to over 200 in India. It will also open over 25 outlets overseas. Dindigul Thalapakkati is profitable and had revenues of Rs 250 crore in the financial year ending March 2019, and expects to cross Rs 350 crore in the current financial year. Overseas outlets contributed over Rs 60 crore in revenues last year. About 50% of the revenues come from biryani items on the menu.

“We saw that they have a strong and differentiated brand recall, especially in Tamil Nadu and now in Karnataka with Bengaluru,” said CX Partners managing partner Jayanta Basu. Other biryani chains that have raised capital include Hyderabad’s Paradise, which got over Rs 100 crore from Samara Capital, and Biryani Blues from Carpediem.