Calcutta-based quick service restaurant chain Wow! Momo Foods has raised $17 million (Rs 123.5 crore) from private equity investors in the latest round of funding, valuing the company at Rs 1,225 crore, a hefty 43 per cent rise in two years.

The capital infusion is being led by Singapore’s Tree Line Investment management which is investing around Rs 100 crore. Two of the existing shareholders, The Lighthouse Funds and Indian Angel Network, are bringing in the rest.

The QSR chain, which operates two brands Wow! Momo and Wow! China, had last received funding from Tiger Global in September 2019 when it was valued at Rs 860 crore.

Even though the pandemic upended the dine-in and take-out food business for close to 18 months, investors’ appetite for QSR chains appears to be intact. Wow! Momo itself had to put up with a string of losses for over 16 months before it turned around in July 2021.

Launched in 2008, Wow! Momo plans to utilise the money to build a large manufacturing base in Greater Noida and Kasba in Calcutta, expand the number of outlets by 150 and cloud kitchen by 50 and launch two more brands.

The company makes frozen momos and sauces in their manufacturing bases/ central kitchens to support the kiosks and sit-down outlets. It has also launched ready to eat momos as a stepping stone for the packaged food business.

After this transaction, the founders and employees who are recipients of employee stock options would continue to hold close 57 per cent stake in the company.

Sagar Daryani, CEO and co-founder of Wow! Momo Foods, said this could be the last round of funding before taking the company public in two to three years.

“Our entire business has pivoted around delivery which is now 70 per cent of the business compared with 25 per cent during the pre-pandemic time. Last two months, we have started making profits again, even though the EBIDTA margin has come down. With the ongoing relaxation in store timing, we hope that sales from the outlets will reach 50 per cent, which is going to be a sweet spot,” Daryani said.

The company, which is present in 17 cities, is making a revenue of Rs 21-22 crore a month, the highest so far, for the last two months.

Earlier this year, two pan-India food chains debuted in the stock market with a thumping valuation. The stocks of Barbeque Nation Hospitality and Devyani International Ltd, which runs Pizza Hut and KFC, were lapped up by the market.

Commenting on the transaction, Zaheer Sitabkhan, founder of Tree Line Investment Management said: “As India is rapidly emerging from covid, we are enthusiastic about their growth plans both in the QSR and ready to eat category.”