Mandala Capital raising Fund II with $250m target

Private equity firm Mandala Capital, which focuses on food and agriculture in the Indian sub-continent, is looking to raise $250 million for its third agri fund, Mandala Capital Fund II.

The firm raised $115 million in 2012 for its debut fund, Mandala Agribusiness Fund, and $120 million in 2014 for its Mandala Capital Fund I.

Fund II, from which Mandala Capital has already made three investments, was launched in the fourth quarter of 2015 and has a hard-cap of $300 million, Mandala Capital managing director Uday Garg told Agri Investor. The firm is aiming for a final close in December.

“The sector continues to throw out greater opportunities. We are finding several large businesses that have attractive and scaleable business models,” said Garg. “Some of the reasons for this include an improving political and policymaking environment, increasing demand for food products from consumers within India and increasingly high standards demanded by food companies from their suppliers, their service providers, such as logistic providers, and so on, which is pushing the agri industry towards scale and consolidation.”

He added a growing focus on the Indian market by global strategic agri players has helped improve conditions for agri investment in India.

Investments made so far from Fund II are in Kolkata-based food-testing lab Edward Food Research & Analysis Centre, Jain Irrigation Systems, and Jain Farm Fresh Foods, Jain Irrigation’s food-processing business. Garg said the firm is currently executing a fourth investment in the dairy and fruit processing sector.

Mandala Capital invested $10 million in EFRAC and has agreed to commit another $10 million after three years, provided the lab reaches an annual turnover of $40 million, according to reports. EFRAC is one of the laboratories that independently tested Maggi’s Masala Noodles in the midst of a 2015 food scandal.

Garg also said Mandala Capital’s deals are highly structured, in part to mitigate their investment risk, but that exits through public markets or strategic sales are possible.

“We play across the capital structure,” he told Agri Investor. “We invest in larger and more established businesses that have greater access to exits via the public markets or a strategic sale. We provide complete funding solutions. We spend lot of time on post investment value addition, focusing on key pivots for the business to perform.”

KKR India director of capital markets Tashwinder Singh recently told Agri Investor that flexible capital was the key to its $77 million investment in value-added dairy Kwality.

The $115 Mandala Agribusiness Fund initially targeted $250 million. It is now fully deployed and the firm is looking at post-investment activities with the fund’s portfolio companies, Garg said. Limited partners in the fund include the University of Texas Investment Management Company and TIAA Global Asset Management.

The firm’s other portfolio companies include seed technology company Arcadia Biosciences, agri-logistics company Gati Kausar and Godavari Biorefineries. In 2012, the firm partnered with Australia Water Resources Group to work on water desalination opportunities in India, Pakistan, Sri Lanka and Bangladesh.

Mandala Capital Fund I is currently 90 percent deployed, according to PEI Data & Analytics.