Theobroma, a high-end bakery brand renowned for its signature brownies, pastries, and quickly expanding nationwide presence, has drawn a significant investment from ChrysCapital, which has purchased a 90% stake in the business. The deal is estimated at a valuation of ₹2,410 crore, as reported by the Economic Times. It marks a significant milestone in Theobroma’s evolution from a family-run enterprise to a professionally scaled food services business.
The deal involves acquiring shares from both the company’s promoters and current investor ICICI Venture, which owns around 42% of the stake in the company. It is reported that the proprietors will retain 10% of the stake in the company.
From Colaba Café to a 1000-Crore Brand
Theobroma was founded in 2004 by two sisters, Kainaz Messman Harchandrai and Tina Messman Wykes. It grew from a small kitchen café to a 225-store pan-India chain, serving pastries, puffs, cakes, croissants and sandwiches.
In her 2020 memoir, “The Theobroma Story: Baking a Dream,” Kainaz Messman described how she had to reconsider her career after suffering a back injury while working as a pastry chef at the Oberoi Hotels. Inspired by their mother’s home-based baking business, she teamed up with her sister Tina and received training at Le Cordon Bleu.
During Dussehra in 2004, the two opened their first café on Colaba Causeway with their father’s seed money of Rs 1.5 crore. At first, it was thought to be a minor improvement over their kitchen at home, but it would quickly grow into something much larger.
A friend of theirs proposed the name “Theobroma,” which means “food of the gods,” and it immediately came to be known as the decadent treats at an affordable price and an elevated dessert experience.
Theobroma’s delicious tarts, rich cakes, and gooey brownies were an overnight hit in India’s growing café and bakery scene in the early days. With its European-style pastries at affordable prices, the brand won the heart of a young aspirational consumer segment. Its emphasis on quality and consistency helped create a loyal and growing customer base, reports say.
More About the Stake Buy-out
According to the ET (Economic Times) report in March, ChrysCapital initiated discussions to acquire Theobroma at a rate lower than the initial Rs 3,000 crore valuation the founding family and the shareholders held out for. The talks that were put on hold for some six weeks following poor financial performance were recently restarted. No takeover announcement has been issued yet.
Other prospective buyers like Bain Capital, Carlyle, and Switz Group of the Khorakiwala family that runs the Monginis bakery chain also expressed initial interest in Theobroma. ChrysCapital’s investment in Theobroma is a part of the company’s plan to build a solid quick-service restaurant (QSR) portfolio. The fund is also committed to buying high-growth food chains such as The Belgian Waffle Co., and the recent deal reflects growing investor interest in scalable, consumer-facing companies in India.
Theobroma is expected to post Rs 525-550 crore revenue and Rs 80-100 crore EBITDA in FY25. It had posted Rs 400 crore revenue and Rs 60 crore EBITDA in FY24.
The company had earlier considered going public, but unstable market conditions stalled its plans for an IPO.
What’s Next for Theobroma?
With the support of ChrysCapital, Theobroma will consolidate its position in Tier 1 and Tier 2 cities and explore opportunities such as e-commerce, licensing of products, and packaged foods. With the increasing demand for premium yet affordable food brands in India, Theobroma is poised to dominate the space.
The most amazing part of this story isn’t the moneymaking transaction – it’s sister’s love, business built on chocolate, hard work, and determination. It is now a case study on how Indian food startups can grow without losing their soul.
The investment gives Theobroma the strategic capital and expertise it needs to propel its growth, expand new markets, and potentially strengthen its supply chain and backend operations. ChrysCapital, as an experienced investor in consumer-facing businesses, offers Theobroma Capital as well as operating experience, which is vital since Theobroma transitioned from a family business to a professionally scaled business.
The Messman family is reportedly still engaged in key roles to keep the values and identity of the brand.
Image Source: Theobroma Official Website
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