PE targets India agri deals

In the first half of 2013, private equity firms completed nine deals in India-based agricultural companies totalling $126 million, up 75 percent from the same period last year, according to a report from Venture Intelligence.

During the same period in 2012, the total was $72 million across six deals.

The two largest deals in the sector were Mumbai-based Multiples Private Equity’s $43 million investment in Milltec Group, a developer of agricultural processing equipment based in Bangalore and a $40 million commitment byIndia Value Fund for a majority stake in VKL Seasoning, a supplier of spices.

Middle East acquirers are also targeting the sector in M&A deals. Earlier this year, StanChart PE sold a 69 percent stake in rice exporter Bush Foods Overseas for $135 million to Qatar-based Hassad Food, bringing a 2.5x return, according to Venture.

This month, rice exporter Kohinoor Foods said it would sell a 20 percent to Al Dahra Holdings, an Abu Dhabi-based agriculture focused investment firm, for $18.8 million.

“The rising appetite for such companies among overseas investors and also the higher prices being enjoyed by agri commodities in recent years could continue to sustain private equity interest in the industry,” said Arun Natarajan, CEO of Venture Intelligence, in a statement.

However, Indian companies have some of the highest valuations in the region.

From January to mid-July this year, the average price-to-earnings ratio for India-listed companies was 15.83, second only to Indonesia, which was the region’s highest at 17.48, according to data from Thomson Reuters.