Hyderabad-headquartered Dodla Dairy Ltd has raised Rs 321 crore ($50 million) from TPG Growth, in what could be largest private equity deal in the dairy sector.
TPG Growth is the growth equity and mid-market buyout fund of US-based private equity firm TPG Capital Inc.
The transaction was routed through the Rise Fund, the PE firm’s global social impact fund, a company spokesperson said.
The investment in Dodla, which is subject to regulatory approval, will be Rise's first in the food and agriculture sector, and the first in an Indian company, she said.
“Dodla is well-positioned to capitalise on growth trends. It has a strong management team, an established presence in local markets, and an expanding selection of products. We look forward to working with Dodla to enhance its brand and grow its platform,” Vish Narain, partner at TPG Growth, said in a statement.
The Rise Fund was launched in December and has a target corpus of $2 billion. It primarily seeks to invest in education, energy, food and agriculture, financial services, healthcare, technology, media, and telecommunications sectors.
“We are excited to partner with the Rise Fund to extend our reach and accelerate our growth,” said Dodla co-founder Sunil Reddy.
The Economic Times reported that the deal involved a secondary component and TPG will be owning a significant minority stake in Dodla after the transaction.
US-based investment firm Proterra Investment Partners, formerly Black River Asset Management, was looking to sell its 23% stake in Dodla Dairy, and had mandated investment bank Edelweiss to scout for potential buyers. Proterra had purchased the stake for Rs 110 crore five years ago.
It was, however, not immediately clear whether Proterra has sold its stake in the latest transaction.
Dodla Dairy, which was launched by D Sesha Reddy and D Sunil Reddy in 1995, sells milk and milk products across south India, Maharashtra, Madhya Pradesh, Rajasthan, Gujarat and West Bengal.
According to the company, nearly 900,000 litres of milk and six tonnes of milk products ar sold every day through more than 50,000 outlets. It sources milk from 250,000 farmer across 7,000 villages.
In July 2016, India’s largest private dairy firm by revenues, Kwality Ltd, had raised Rs 520 crore from alternative investment giant Kohlberg Kravis Roberts & Co Ltd in a structured finance transaction to boost its consumer facing business.
TPG Growth have struck a string of healthcare deals in India last year. It was planning to acquire a minority stake in Mumbai-based Surya Mother & Child Care Super Speciality Hospital for Rs 80-100 crore.
Earlier, it had backed Rhea Healthcare Pvt. Ltd, which runs a chain of mother- and child-care hospitals under the Motherhood brand. The PE firm had also pumped in money in Cancer Treatment Services International, an India- and South Asia-focused cancer care provider.