CDC has committed $10 million to Rabo Equity Advisors' India Agri Business Fund, which is targeting commitments of $100 million to invest in mid-market companies.
The commitment marks CDC's first investment under its new investment policy. Effective 1 January 2009, the firm said it would focus more on investments in the world’s poorest countries, allocating 75 percent of its new investments to countries which have an annual gross national income per head of less than $905.
The India Agri Business Fund will offer opportunities to India’s food companies, which will stimulate economic growth in the country through more jobs, better infrastructure and economies of scale, Anubha Shrivastava, CDC’s managing director of Asia, said in the statement.
Shrivastava noted the high unit production costs and low global competitiveness of Indian agribusinesses companies due to their small sizes and limited product range. While the government helps through efforts to build food parks and upgrade institutional infrastructure, “private investment will help bridge the gaps in the sector”, she said.
The India Agri Business Fund held a first close on $85 million in July 2008. At the time, Rajesh Srivastava, who heads the fund, said in an interview that the fund was likely to raise as much as $120 million due to the high levels of interest shown.
Limited partners in the fund include International Finance Corporation, the private investment arm of the World Bank; FMO, the Dutch entrepreneurial bank, and DEG, a German development finance institution. FMO and DEG have each committed $20 million to the fund while Dutch bank Rabobank is sponsoring the fund with a $25 million commitment.
The fund's maiden deal was an investment in Sri Biotech Laboratories, an organic agricultural products maker and retailer.
Rabo aims to make between 10 and 15 more investments from the fund with an average deal size range of between $3 million and $20 million over a four year period.
Rabo Equity Advisors is a subsidiary of Rabobank. Rabobank has a 51 percent stake in the fund manager while FMO and DEG have stakes of 10 percent each in the fund management company, with the remaining 29 percent held by Srivastava, who heads the fund.