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Permira sells drip irrigation provider for $1.9bn

The deal with Mexican plastics company Mexichem marks an exit for Permira IV, which invested €800m in Netafim in 2011.

drip irrigation

Buyout firm Permira has sold its 80 percent stake in Netafim, an Israeli drip irrigation equipment provider, to Mexican plastics company Mexichem for $1.895 billion.

Netafim’s founder, Kibbutz Hatzerim, will retain a 20 percent stake following the transaction, which is expected close during the fourth quarter.

Permira purchased its stake for €800 million in 2011 using capital from the Permira IV fund, which closed on approximately €11 billion in 2006. The London-headquartered firm has since worked on narrowing the company’s focus on its core irrigation business, developing new precision farming products and expanding it into new markets in China, India and Africa.

Permira did not respond to requests for further comment at the time of publication.

Netafim provides advanced drip irrigation, crop management and automation systems as well as related equipment such as sprinklers, valves and water meters. By delivering water directly to the roots of crops rather than above ground, Netafim says its products can support an up to 50 percent increase in crop yields while using up to 40 percent less water. Founded in 1965, the company has 29 subsidiaries, 17 manufacturing plants and customers ranging from smallholders to large-scale agricultural producers in more than 110 countries.

“This is a transformational acquisition that advances Mexichem’s drive into specialty productions and solutions and establishes us as a leading innovator in the high-growth, micro-irrigation market,” said Mexichem chief executive Antonio Carrillo Rule.

“Netafim positions us to become a leading developer of solutions to address food and water shortages, and respond to the need to increase crop yields and meet higher sustainability standards for fertilization.”

Permira is a global investment firm founded in 1985 that has $35 billion in committed capital. Its investments are categorized by sector, with units dedicated to consumer, financial services, healthcare, technology and industrials, which includes agriculture. The firm maintains 14 offices across Europe, North America and Asia.