India Hospitality Corp. (IHC) has sold 74% stake in its wholly-owned airline catering company Skygourmet Catering Private Limited to Switzerland-based Gate Gourmet, a member of Gategroup Holding AG for $39m in cash.

IHC will continue have a 26% in Skygourmet and is also entitled to proceeds from land sale in Delhi.

With this deal, Gategroup plans to expand in the Indian fast growing market, where air traffic has been increasing at an average of some 20% recently.

IHC has informed the transaction implies an enterprise valuation for the whole of Skygourmet at about $92 Mn. This implies, that the remaining amount may have gone towards adjusting debt of the firm.

The proceeds of the sale will be used by IHC to continue developing its hospitality and restaurant businesses.

Transaction Reference: ET

Established in 2002, Skygourmet produces 110,000 meals per day and is the sole local caterer with catering facilities in all of India's six major airports. It operates in Mumbai, Delhi, Bangalore, Chennai and Hyderabad and is in the process of constructing a new unit in Kolkata. In Pune, Skygourmet has a franchise arrangement.

Skygourmet has clients like Jet Airways and its subsidiary, JetLite; Kingfisher Airlines; and NACIL (Air India/Indian Airlines). The company employs 2,600.

Co-promoted by Ravi Deol, the former CEO of coffee chain Barista that is now owned by Lavazza, and Sandeep Vyas, IHC has some leading investors such as Fidelity , Fortress, Hayground Cove, and Goldman Sachs . In August 2006, IHC raised $103 million in an IPO at LSE-affiliated AIM.

IHC is a diversified pan-Indian hospitality and leisure company and is present in airline catering, hotel and restaurant segments, through its India-based subsidiaries WAH Restaurants Pvt Ltd (formerly Red Planet Restaurants Pvt Ltd and Mars Restaurants Private Limited) and SkyGourmet Catering Private Limited ("SkyGourmet").

The deal comes on the backdrop of recent news that IHC is close to acquiring world’s largest noodle bar chain Wagamama for $400 Mn, which has over 38 international restaurants and 66 restaurants based in the UK.

IHC acquired Skygourmet and restaurant chain Mars Restaurants from private equity firm Navis Capital and entrepreneur Sanjay Narang in 2007 for $110 Mn.

Gate Gourmet is the world’s largest independent provider of catering and provisioning services for airlines and railroads.

Gate Gourmet already has a unit in the Indian resort town of Goa, which it acquired in 2007 It is listed on the Swiss SIX Exchange with revenues of $2.8 Bn in 2009 with a profit of $53 Mn.

Besides Skygourmet, some of the leading players in the air catering market are TajSats, Ambassador, Sky Chef and Oberoi Flight Services.

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