<div><strong>Paramita Chatterjee</strong></div><div> </div><div>A sector that used to be on top of the list for private equity (PE) firms now features a tad lower when it comes to investor interest. The consumer story in the domestic market has not spruced up the fast-moving consumer goods (FMCG) sector as a top investment sector, if we go by pure investment data availablefor this year. </div><div> </div><div>Consider this: In the last 10 months of the current calendar year, only three FMCG companies have received funding from risk capital investors such as PE and venture capital (VC) firms, as per Venture Intelligence. In terms of value, PE and VC firms have invested as much as $50 million in the January-October period this year. This is significantly lower than 2014, which witnessed 6 deals worth $66 million.</div><div> </div><div>The drop in investment interest in the so called traditional FMCG sector comes at a time when risk capital investors are increasingly shifting their focus on new age sectors such as mobile and internet that are riding the domestic consumption wave. However, industry analysts say this is just a temporary blip as the Indian consumer story is secular and spells a long-term growth trend. “Hardcore consumer players still remain a good investment proposition,” said Raja Lahiri, partner at advisory firm Grant Thornton. “It is not easy to build a brand in India. People need funds to build them,” he added explaining that it may be the fringe players which have seen a dip in investment activity. FMCG as a category is vast with diverse sections like consumer and food and beverages featuring under it. There is still significant investor interest in dairy products, companies that make juices and food.</div><div> </div><div>The latest deal in the FMCG space was clinched by Premji Invest, the private equity fund promoted by Wipro's billionaire Chairman, Azim Premji, which has invested in Mumbai-based Hygienic Research Institute, hair colour makers of Vasmol and Streax products. This was announced earlier this week. Earlier this year, PE firm Everstone Capital acquired Modern Bakery, the bakery business of FMCG giant Hindustan Unilever for an undisclosed amount. Both the transactions have seen investments above $30 million. The other two deals that have been sealed earlier this year have been of a small ticket size.</div><div> </div>
