CHENNAI: A private equity fund managed by Kotak Venture Funds would invest around $10 million in Chandrababu Naidu promoted Heritage Foods. The deal was signed on Monday evening.

Sources familiar with the development said that the board of directors of Heritage would meet on January 4 to ratify the placement to Kotak VC on a preferential basis.

The monies raised from this exercise would be used to expand the ‘Fresh@’ stores from the present 50 to 100. “The Fresh@ stores which Heritage Foods started last year to jump into the retail bandwagon has met with considerable success. The business needs more funds to expand and therefore this placement,” sources said.

Heritage started to roll out its retail format under brand name ‘Fresh @’. All the stores are only in South India and the strategy is to remain in South for the time being, expand the footprint and then look at other markets.

“The stores are all in Chennai, Bangalore and Hyderabad. We sell 50 grocery products like cereals, pulses and staples under brand name Farmers Pride’. The plan is to open one store each in every neighbourhood in the three Southern cities,” sources added.

Heritage Foods is primarily into milk and milk products and has established a network of procurement and chilling plants across South India.

Incidentally, the company made a preferential offer of warrants (which will be converted into equity) to the promoters at Rs 256 only in December.