Dutch-based Rabobank on Friday announced the launch of a $100-million private equity fund that would target investment opportunities in food and agri-business sectors in India.
This private equity fund — India Agri Business Fund — is an offshore fund based out of Mauritius, said Mr Rajesh Srivastava, Chairman and Managing Director, Rabo Equity Advisors, which will be the investment manager for the fund.
Rabobank, which has sponsored the fund, would provide $25 million towards the fund. International Finance Corporation, FMO, a Dutch development bank, and DEG, member of the German KfW Group, will each invest $20 million, with the balance to be tied up with private investors.
Mr Srivastava said that the fund would invest in companies operating in more than 38 sub-sectors of food and agri-business as well as in agri-infrastructure, such as cold chain logistics and warehousing.
The focus would be on small and medium enterprises with turnover of around $50-75 million.
The fund would invest anywhere between $3 million and $10 million in a company and is expected to complete deployment in one or two years.
Rabobank’s ‘India Agri Business Fund’ is the first agri-business focused private equity fund in Asia for the bank.
In India, private equity investments focused on food and agri-business are taking off in a big way.
YES Bank, in which Rabobank International Holdings has over 18 per cent stake, had last year launched a $100-million private equity fund —YES Food & Agribusiness India Fund.
On the returns that are expected from the investments, Mr Srivastava said that he had not set his sight on “high returns” and was looking at a realistic internal rate of return at the 20-per cent levels.
“Generally private equity would demand returns of 25-30 per cent. But we are not looking at such returns for this fund. Agri-business is a sector that requires patience on the part of investors and so we are looking at threshold IRR of 20 per cent for this fund,” he said.
Mr Srivastava told Business Line that he would not go in for Private Investment in Public Enterprise deals.
He also said that the fund could go up to $120 million. “We can always raise more money,” he said.
Source: The Hindu