Private equity major Blackstone Group is picking up a stake in Hyderabad-based seed maker Nuziveedu Seeds Ltd, a part of the privately-owned NSL Group. The US-headquartered fund is investing an amount of $50 million, which can go upto $80 million, for less than 25% stake in the company. The deal is via a fresh issue of shares, and was closed this week. NSL Group is a diversified group and also has a presence in textiles, sugar, wind energy and infrastructure.
This is the second deal for Blackstone in as many months. Last month, it agreed to buy out a division of CMS Computers. Both the investments are in privately held companies.
Nuziveedu plans to use these funds to develop and market seeds of rice, corn and vegetable hybrids. It also plans to use the funds for further expansion and adding a research and development unit. The firm currently has revenues of Rs 500 crore, of which 80% are earned through selling hybrid cotton seeds. Nuziveedu Seeds has around 1,000 employees.
Nuziveedu Seeds claims to be the largest hybrid seed company in India, and its distribution network includes nearly 25 stocking depots and 1,000 distributors. "India is focusing on improving its agriculture sector and is witnessing a significant increase in investments in it," said Akhil Gupta, Chairman and Managing Director of Blackstone Advisors India Private Limited, in a release.
JM Financial was the advisor for this transaction.
Agro-based companies are turning out to be new favourites with private equity funds as funding seems to be drying out. Morgan Stanley Private Equity Asia announced its first deal in India by picking up a minority stake in castor oil maker Biotor Industries Ltd for Rs 182 crore last week. Earlier this month Chennai-based agro solutions firm Sree Ramcides raised Rs 25 crore from sector and stage agnostic fund ePlanet Ventures.
Investment in companies involved in agriculture related activities is likely to increase as it's a counter-cyclical sector that will not see a slow down in demand as the global economy slides. Besides general private equity funds, sector focused funds are likely to increase their activity in this sector. Earlier this year Rabobank raised a $100 million food and agriculture fund for India. Yes Bank is also planning an agriculture fund.