Agriculture venture capital firm Greenrock is fundraising for a $10 million fund to invest into protected cultivation farming projects in India.
The fund, Green Rock Ventures, will provide overseas investors with rare exposure to India’s agricultural land market; foreign ownership of farmland is prohibited but the ownership of greenhouses and corresponding land is not.
The fund will offer investment returns based on the production of fruit and vegetables, but there is also a real estate play, according to Jozef Bardik, Greenrock’s managing director.
“There are tight guidelines on foreign land ownership but ultimately, if you want to put up a greenhouse, you are allowed to own the land below it in some Indian states,” he said. “Greenhouses are the only way to get access to agricultural land in India and we think our project will have double bottom line return both from agriculture and land appreciation, while also having a social impact on the local communities which we support.”
The fund has already invested $1 million from angel investors and expects to close on $10 million by the end of the year.
And the firm itself, a joint venture between Indian agricultural enterprise Hosachiguru and Slovakian venture firm Werbau, has raised $4 million to start investing in its first pilot farm, build up the organisation’s capabilities and purchase operational machinery supplies such as cold storage. That round was raised from Werbau, US venture capital firm Anthropic and individuals from India and the EU that will own direct stakes in the initial projects.
This group of investors owns a special purpose vehicle holding around five acres of land and greenhouses. But the firm is now preparing the due diligence and legal framework to launch a fund, according to Bardik.
On the first farm, Green Rock is expecting gross returns of around 20 percent to 25 percent from agricultural production with more upside from real estate on top. But for other projects the company does not want to predict target net returns for investors of more than 15 percent as the macroeconomic environment looks set for some stabilisation in the Indian economy which could impact yields if inflation falls, said Bardik.