Investment firm Small Enterprise Assistance Funds (SEAF) is raising a $75 million growth capital fund focused on India’s food and agribusiness sectors.
The SEAF India Agribusiness Fund expects to hold a first close on $35 million by the end of May and is targeting a final close by the end of 2009, Hemendra Mathur, a SEAF managing director, said in an interview.
The firm has already identified six investments and expects to close up to three of them between May and December this year. The fund is expected to be fully invested by the end of 2012. “We expect an IRR in excess of at least 25 percent,” said Mathur.
The fund will primarily invest in minority positions of between 15 percent and 40 percent, in unlisted small and medium enterprises in tier two and tier three cities. It has identified 33 sub-sectors within the food and agribusiness sector to invest in. These include agriculture input, logistics, food processing, food retail and services.
“We believe India’s agribusiness is at its inception point. Currently, 8 to 10 percent of the country’s agriculture products are being processed. In Western and even Southeast Asian markets, this figure is in excess of 30 percent. So there is a significant latent demand for processed food,” he said.
Another fund targeting India’s food and agribusiness sector is the $100 million India Agri Business Fund. The fund is sponsored by Dutch bank RaboBank and its three lead investors are International Finance Corporation, the private investment wing of the World Bank; Dutch entrepreneurial bank FMO; and German development finance institution DEG.
Founded in 1989, SEAF manages 24 funds primarily focused on small and medium enterprises across Europe, Latin America and Asia. The funds have made about 280 investments so far, out of which approximately 100 are in the food and agribusiness sectors.