Rabobank plans $100 Mn agri-business PE fund

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Chennai: The Netherlands based financial institution Rabobank is planning to set up a $100 million private equity fund in India, which will focus on the agriculture value chain. Founded as a cooperative of Dutch agricultural banks in the late 1800s, the Rabobank Group has some 175-member banks in the Netherlands and dozens of subsidiaries around the world that focus on the food, agribusiness, and financial industries. This PE fund is expected to invest in small and medium-sized companies ranging from contract farming at the primary end and key elements of the agricultural supply chain such as cold storage chains to food processing and rural retail. The deal sizes are likely to be in the range of $3-10 million per transaction. The segment of food-processing in India is growing at a rapid pace given the demands from aggressive retail chain roll out being witnessed in the Indian landscape over the past two years. "A third of the agri-produce goes waste in India. Processing is of much importance in the Indian context, more so given the expansion of the retail sector," an industry analyst noted. Industry estimates say that while India is among the largest producers of food-grains, processed food accounts for merely two percent of total food production in India, which is very low as compared to the western countries. Various research reports further indicate that taking market forces such as the rising income level and changing consumer behavior due to the rapid economic growth, it is expected to have a growth rate of 10 percent in 2010 and 25 percent in 2020. This move by Rabobank to set up a specialised $100 million private equity fund comes at a time when the India's GDP growth is at 8 per cent, with agriculture sector growing at 3 percent.