Rebel Foods Set for £100-£150 Million Investment from Temasek
Singaporean sovereign wealth fund Temasek is in advanced talks to lead a £80-£120 million investment in Rebel Foods, the parent company of popular Indian food brands such as Faasos and Behrouz Biryani. Sources close to the deal suggest the investment will be a mix of primary and secondary share sales, with the Mumbai-based unicorn being valued at a level roughly similar to its last funding round nearly three years ago.
The secondary sale, where existing investors will partially divest their shares to Temasek, is expected to see a lower valuation of around £560 million. Rebel Foods achieved unicorn status in October 2021 following a £140 million funding round that valued the company at £1.12 billion. The round was led by the Qatar Investment Authority (QIA).
US-based Coatue and Indian fund Lightbox are anticipated to offload a portion of their stakes during the secondary sale. "Coatue and Lightbox are finalising the amount of shares they will sell. Other investors may also participate. Temasek is joining as a new investor," said one source. Lightbox holds a 9.7% stake in Rebel Foods, while Coatue owns 18.6%. Peak XV Partners and Goldman Sachs are among the company's other investors.
A secondary share sale differs from a primary funding round in that funds do not flow into the company's coffers.
Rebel Foods founder and CEO Jaydeep Barman, Temasek, and Lightbox declined to comment on the ongoing talks. Emails sent to Coatue remained unanswered.
Temasek, a prominent investor in emerging technology companies, has previously announced plans to invest an additional £8 billion in India over the next three years, amidst a slowdown in the Chinese economy. The fund invested £2.4 billion in India last year and is a significant shareholder in businesses such as Manipal Hospitals, Ola Electric, Zomato, Upgrad, and Cultfit.
Rebel Foods and the Rise of Cloud Kitchens
Cloud kitchen brands have experienced moderate growth and are expanding their reach offline through their own or franchised outlets. Curefoods, backed by Flipkart founder Binny Bansal, has secured £40 million in funding this year.
The proposed £67-£100 million investment in Rebel Foods signals a return of significant late-stage deals in the sector. "Rebel Foods has been one of the few companies with predictable growth in the sector, and its brands are gaining visibility. Funds have their own investment cycles, and these transactions are designed to align with that," commented another source familiar with the talks.
The company plans to launch an initial public offering (IPO) within the next two years. Rebel Foods operates 450 kitchens in 70 cities and distributes its brands in over 10 countries, including the UAE, Saudi Arabia, and the UK. Some of its other brands include Oven Story Pizza, Mandarin Oak, Firangi Bake, and Sweet Truth. EatSure, Rebel Foods' own ordering platform, also manages offline outlets and plans to expand its network. The company holds a majority stake in chocolate and dessert brand Smoor and has master franchise rights for Wendy's India.
An industry executive highlighted the increasing reliance on proprietary platforms to generate sales and reduce reliance on marketplace commissions from platforms like Zomato and Swiggy. "Previously, about 20% of orders came from EatSure, and that figure has grown. Cloud kitchens with multiple brands are increasingly looking to generate more sales through their own platforms."
The Future of Cloud Kitchens
Entrepreneurs in the cloud kitchen sector recognise the need for diverse brands targeting different customer segments. "You need multiple brands based on price and food category, as one brand won't appeal to everyone," noted one founder.
Eat Club, another cloud kitchen operator, boasts nine brands, including Box 8 meals and Mojo Pizza.
According to a recent report by the National Restaurant Association of India (NRAI), the cloud kitchen sector is expected to grow at a rate of 30-40% between 2019 and 2024, with an outlook of 35.20% growth over the next four years. This growth rate surpasses those of QSR stores, cafes, casual dining, fine dining, and other segments in the food sector.
