Hector Beverages raises Rs 183 crore from Sofina and Hillhouse Capital

Hector Beverages, which makes popular drink Paper Boat, has raised about Rs 183 crore in funding led by Belgian investor Sofina and China's Hillhouse Capital.

Existing investors Sequoia Capital and Catamaran Ventures also participated in Hector's largest fundraise since its inception in 2010, which, according to estimates by investment bankers, values the company at Rs 400 crore-Rs 500 crore, or 2.5-4 times revenue. Overall, Hector has raised Rs 250 crore.

"We will be good for the next 18 months for sure with this new fundraise," said Neeraj Kakkar, CEO and Founder, Hector Beverages.

The company will use the funds to add more flavours under Paper Boat, increase manufacturing capacity, hire senior executives and expand its distribution reach.

Hector is also planning to launch another television campaign in September-October.

Sofina invested Rs 63.15 crore in Hector and Hillhouse Rs 44.44 crore, show documents filed by Hector Beverages with the Ministry of Corporate Affairs. Sequoia put in Rs 45.9 crore and Catamaran Rs 24.9 crore. Independent investors Kanwaljit Singh and Shripad Nadkarni and a few other early backers of the company invested the remaining sum.

"Supporting a talented team, and one that has disrupted production and distribution of traditional Indian recipes, fits in Sofina's overall strategy as a long-term supporter of talented investors and entrepreneurs in growth markets," Maxence Tombeur, head of Asia at Sofina Group, said in a statement to a national daily.

Tombeur will be on the board of Hector along with David Rhee, partner at Hillhouse Captial.

Hector was in the market 8-10 months earlier to raise funds at a valuation of Rs 300 crore-Rs 350 crore, according to people familiar with the matter. TA Associates and TPG Capital had expressed interest but decided against investing as they deemed the pricing high, these people said, declining to be identified.

Meanwhile, Hector is also planning to add a third factory in Mysore later this year with a manufacturing capacity of 8 million units a month. Its existing two factories in Manesar and Mysore have a combined capacity of 10 million units a month. "We sell about 7-8 million units a month," added Kakkar.

In April, the company sewed a partnership with Japan's Indo Nissin Foods that helped it expand into small towns and villages and double its retail contact points to 30,000. The company also sells online and has begun exporting Paper Boat to the US, Malaysia and Dubai.

"Our main focus is India for the next 12-18 months as a core market and to expand everything here. Exports will continue but not be a big part of our plan," Kakkar said.

Hector's revenue jumped 42.6 per cent to Rs15.9 crore in 2013-14, as per the MCA filing.