CDC, the UK development finance institution, has committed $30 million to Rabo Equity Advisors’ India Agribusiness Fund II, the food and agriculture private equity fund, PEI sister publication Agri Investor has reported.
The fund, which is targeting $200 million, is now on $80 million and is set to announce a first close on $100 million before the end of the year, according to Rajesh Srivastava, chairman at Rabo Equity Advisors in Mumbai.
Other investors in the fund so far include parent company Rabobank, which committed $30 million, Dutch development finance institution (DFI) FMO, and Danish DFI IFU, which both committed $10 million each. Rabo, CDC and FMO are repeat investors from Fund I.
The fund is awaiting confirmation from two more DFIs for $10 million each to complete the first close, although the fund is now “in business” and will start deploying capital immediately, according to Srivastava.
Fund II launched shortly after Fund I completed deployment of its $120 million. Fund II will target a similar group of food and agri companies seeking growth capital, although it will have a longer term of 10 years compared to Fund I’s eight-year term.
“It was a lesson learnt from Fund I that food and agri needs more time – not to deploy, but to mature companies and ride the cycle,” said Srivastava. “Agri infrastructure deals, such as in cold storage and logistics, naturally need longer to develop, for example, so it’s good to have the flexibility.”
The size of the deals will also be bigger, most likely ranging from $15 million to $30 million, so that the fund can maintain large stakes in a growing sector, Srivastava told Agri Investor.
The deal range in Fund I was $3 million to $12 million. Rabo Equity Advisors targets companies across the value chain from production to consumer to technology. It has no particular targets for any one sector within the chain. It has started exiting Fund I by selling GeePee Agri Private, an edible oil producer, to ADM, a UK-based oil, flour and chocolate manufacturer.
The fund intends to sell companies back to their promoter or to strategic buyers, and will also list some of the smaller firms on the local stock market through an IPO next year, said Srivastava.