A few retail industry honchos are coming together to set up $100-million private equity fund that will focus on investments in agri and food supply sectors. I-Farm Venture Advisors, headquartered in Gurgaon, is being spearheaded by former president at Reliance Retail Sanjeev Asthana amongst others including Chandra P Singh, a business head at Spencer Retail.
The fund is on the road raising capital currently and hopes to make an announcement in the next one month. I-Farm Venture Advisors is holding talks with Indian corporates houses, with interest in agri, food and retail sectors, to come in as anchor investors, a source familiar with the development said.
The supply chain linkages and sourcing from rural markets, which are critical challenges to corporates working in these sectors, will also be potential investing themes for the new fund.
When contacted by VCCircle, Chandra Singh said, I-Farm plans to make an announcement in next weeks without disclosing further information. Asthana could not be reached for comments as he was travelling.
PE interest has been revving up the agriculture and allied domains slowly. With organised retail touted to be one of the biggest consumer stories, a lot of entrepreneurial ventures bridging the gap between rural agrarian and urban consumer markets are taking off, also requiring sizable growth capital infusion. In context, a PE fund managed by senior executives from the retail industry could become an interesting investment play.
Meanwhile, private equity seems to be becoming the new calling for retail executives. Besides Asthana, sources added, Reliance Retail's whole time director Raghu Pillai is also being approached by PE firms to join in advisory or operating roles. Earlier this year it was announced that PIllai would leave Reliance Retail middle of 2010.
Another top Reliance Retail executive, Gunender Kapur, was appointed by global buyout major TPG Capital as a senior advisor to assist on investments in the consumer and retail sectors in India. Kapur is also expected to play a major role in helping TPG steer Vishal Retail if the deal comes through.
India's consumer staples sector attracted private equity investments of $452 million across 34 deals since 2008, according to VCCEdge. Global private equity majors like Blackstone and Carlyle have been eyeing India's food and agriculture space. Some recent investments include Carlyle's Rs 110 crore infusion in Tirumala Milk Products and US-based Summit Partners made its debut in India with a $30-million investment in Krishidhan Seeds.
Supply chain is another area that is likely to emerge as a key opportunity for investors and entrepreneurs. There have been some investments in the supply chain side recently. Last year Snowman Frozen Foods, a cold chain logistics business, raised Rs 25 crore from IFC. The World Bank's arm is also looking to invest Rs 35 crore in National Collateral Management Services, a Mumbai-based provider of integrated supply chain solutions as well as risk management services to producers, traders and end users.
There are also a couple of agriculture focused PE funds which are actively seeking investments in supply-chain firms. Rabo Equity Advisors, the PE arm of the Dutch bank Rabo, has raised a $120-million India Agri Business Fund and has closed six deals since its launch in 2008. SEAF (Small Enterprise Assistance Funds) is also raising an Agribusiness Fund, tipped to be at $75 million.