If there is one industry that is considered recession-proof, it is food and agri-related businesses. And, it did not disappoint in terms of deal activity during the last two years, a period that saw both mergers & acquisitions (M&A) and private equity (PE) transactions shrink in almost all sectors. Food and agri-related businesses have consistently clocked 45-50 deals for the last four calendar years, led by M&A deals accounting for two thirds of the transactions every year, according to deal volume data from VCCEdge. Indeed, if early trends for 2010 are any indication, the current year is unlikely to be different either.
So, in this appropriate backdrop, VCCircle and ICICI Bank are putting together its second edition of Agri, Food & Emerging Sectors Investment Summit 2010 to unravel the various investible niches in the farm-to-fork value chain. (Click to register).
The average ticket size of the deals has been small which reflects the fragmented industry structure that is yet to see large scale consolidation. Over half of the deals, whose value is available, have been struck in the sub-$10 million bracket.
Those over $50-million level comprise less than a sixth of the total and only a handful have managed to scale the $100-million mark. The total value of deal activity struck in the industry, especially over the last four years, is pegged at around $5 billion.
Among the most active PE/VC firms in the space include IFC, India Agri Business Fund, New Vernon Private Equity, Citi Venture Capital, India 2020 Opportunity Fund, Gem India Advisors and Times Private Treaties.
The prominent PE transactions in terms of deal value include investment by a string of funds including Elara India Opportunities and Monsoon India Inflection Fund in Karuturi Global, India Hospitality Corp’s investment in Mars Restaurants, Darby Asia and Deutsche Bank’s deal for Amalgamated Bean Coffee Trading Co, GIC and Actis’ investment in The Nilgiri Dairy Farm and joint investment by Baring PE Asia, Citi Venture Capital and New Silk Route in KS Oils.
Some business groups who were active in the space include Tatas (Tata Chemical and Tata Tea), Britannia, United Phosphorous (and Advanta), Indage Vintners, Jain Irrigation, Mcleod Russel, Shiva Fertilizers, Shree Renuka Sugars, United Breweries (and United Spirits).
In terms of spread of transactions, food products have been the most attractive field for dealmakers followed by beverages, fertiliser & agri chemicals besides food retail and restaurants.