UK fund of funds CDC Group Plc has committed $10 million to Rabo Equity Advisors’ India Agri Business Fund. This investment is part of CDC’s new investment policy which came into effect on January1, 2009, according to which, the lender will invest in the world’s poorest nations. About 75% of its investments will go into countries with an annual gross national income per head of less than $905.
CDC is a development finance institution owned by the UK government.
The $100 million agri fund, sponsored by Rabo Bank, will invest across the food and agri sector. According to Rajesh Srivastava, Chairman & Managing Director, Rabo Equity Advisors, sectors like food processing and agri inputs are currently the most promising sub sectors. “We are also interested in investing in the food service sector which includes restaurant chains, convenience foods and frozen foods. Some part of the agri infrastructure story like the cold chain logistics is also attractive,” he told VCCircle.
Earlier this year, the fund made its first investment in the Hyderabad based agri-biotech firm, Sri Biotech Laboratories India Ltd. It has invested Rs 45 crore in Sri Biotech Laboratories. The fund is expected to soon announce its second investment. Srivastava said, “We are just about closing our second investment, which we will announce soon.” The fund plans to close at least 3 more investments this year.
The fund will continue to do minority stake transactions with significant share holdings of more than 15%. It will not look at doing control transactions. “While we are not a fund making controlled deals, we definitely are a very proactive fund,” said Srivastava. The private equity fund is an offshore fund based out of Mauritius.
Srivastava is quite upbeat about the agri sector in India. He feels that the agri sector is resilient to the economic downturns. He says, “In the last few months, most of the agri sectors have done well. The logic is that there are so many more people to feed every year in India so the market gets bigger every year.”
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