Peepul Capital, a Chennai and Hyderabad-based private equity fund, has committed up to $15 million into Sresta Natural Bioproducts Ltd, a farm-to-fork organic food business in Hyderabad, at least two people with direct knowledge of the development told VCCircle.
Sresta, a company operating in the organic food space, was founded in March 2004 by Rajshekhar Reddy Seelam or Raj Seelam. However, this is not the first round of institutional funding for the company that has earlier raised $1.14 million from Biotechnology Venture Fund, a fund managed by VenturEast Fund Advisors India Ltd.
The IIM-Ahmedabad alumnus began by selling pesticides and fertilisers to farmers at the Murugappa Group company, EID Parry. After working closely with farmers and piggybacking the first-hand knowledge gained from them, Seelam went on to create Sresta – an organic food business which could help avert pesticide havocs.
Currently, the company owns more than 30000 acres of land, under various stages of organic production. It has the ability to produce 6,000 tonnes of organic food products ranging from grain and fruits to pickles, jams and bakery items. Its key competitors include Fabindia and Mumbai-based Conscious Foods, besides other small players.
According to VCCedge, the financial research platform of VCCircle, the company recorded net sales of Rs 10 crore for the year ended March 2010.
The stake picked up and therefore, the valuation of the company, could not be immediately known. An e-mail query sent to Sandeep Reddy, Managing Partner of Peepul Capital Advisors, did not elicit any response till the time of writing this article.
The space has already seen private equity action in the recent past. Earlier, Suminter Organics raised funding from Nexus Venture Partners.
Founded in 2000, Peepul Capital began its operations with a fund size of $110 million and raised its second fund of $214 million. Till date, it has invested in about 12 companies. It recently raised a little under $320 million for its third fund.
Some of its investments between the two funds include $13 million in Aqua Designs India Pvt Ltd (environmental & facilities services), $10 million in TeleDNA Communications Pvt Ltd (application software), $21.5 million in UniverCell Telecommunications India Pvt Ltd (computer & electronics retail) and $1.8 million in Megasoft Ltd (IT consulting & other services).
Other portfolio companies include DQ Entertainment International Ltd (movies & entertainment), MedPlus Health Services Pvt Ltd (specialty stores) and Kam Avida Enviro Engineers Pvt Ltd (environmental & facilities services).
Peepul usually commits $15 million-$25 million of equity in each transaction, and is skewed more towards expansion stage and restructuring/buyout opportunities. A majority of the fund’s portfolio investments are in southern India in order to better leverage Peepul Capital’s presence, networks and experience – given the significant levels of execution risk involved at the growth stage.