India, having extremely high percentage of food wastage, is witnessing an enhanced interest from private equity firms in India in the cold chain and agri-logistics industry, generating high valuations for their scalable and growing businesses.
Huge Investment in Three Years
It has been estimated by the Venture Intelligence that PE firms have invested nearly 151.55 million dollars (Rs 940 Crore) in 11 enterprises in three years of span. The biggest recipient of this investment is Sohan Lal Commodity that has gained $33 million by Everstone, Mayfield, ICICI Bank and Nexus Ventures. Many more investments are expected in the next year.
Cold chain and Agri-logistics companies, which are expecting revenue growth within 20% to 100% annually, are expecting to get between Rs 15 crore to Rs 100 crore, to improve operations across the country. Suri Agrofresh, Origo Commodities, Scheduler Logistics and IG International, Dev Bhumi Cold Chains are some of the companies scouting for private equity funds in India.
Current Scenario
Almost 40% of fruits and vegetables are spoiled in India while travelling from the grower to the end user, primarily due to lack of storage system, poor transportation infrastructure and bad roads, as per the food wastage report by Institution of Mechanical Engineers.
PE Investment Can Improve the Condition
Several businesses in this sector are family-run and does not welcome outside control. It may have unreliable balance sheet also. Still this growing sector is in need of professional handholding and guidance. ‘The concept behind this investment is to bring in a network of associations, corporate governance oversight, additional investors, and experience with M&Q’ - said Nikhil Shah, senior director of Alvarez & Marshal India, who is also advising several PE players on opportunities in this segment.
Albeit, these businesses are growing and are capable enough to grow faster, the gross margins is expected to be in the span of only 5-6%. This margin can be increased by developing more domain expertise and knowledge to weed out unprofessionalism and inefficiencies.
Synopsis
Given the above scenario of food wastage and poor condition of companies of cold and agri-logistic, it is necessary that this sector needs to be lifted and supported by private equity funds in India. Reacting to the need of the hour, private equity firms in India are staking on the potential scalability of well-organized players in this industry, in spite of rainfall dependent and seasonal nature of the business.
Huge Investment in Three Years
It has been estimated by the Venture Intelligence that PE firms have invested nearly 151.55 million dollars (Rs 940 Crore) in 11 enterprises in three years of span. The biggest recipient of this investment is Sohan Lal Commodity that has gained $33 million by Everstone, Mayfield, ICICI Bank and Nexus Ventures. Many more investments are expected in the next year.
Cold chain and Agri-logistics companies, which are expecting revenue growth within 20% to 100% annually, are expecting to get between Rs 15 crore to Rs 100 crore, to improve operations across the country. Suri Agrofresh, Origo Commodities, Scheduler Logistics and IG International, Dev Bhumi Cold Chains are some of the companies scouting for private equity funds in India.
Current Scenario
Almost 40% of fruits and vegetables are spoiled in India while travelling from the grower to the end user, primarily due to lack of storage system, poor transportation infrastructure and bad roads, as per the food wastage report by Institution of Mechanical Engineers.
PE Investment Can Improve the Condition
Several businesses in this sector are family-run and does not welcome outside control. It may have unreliable balance sheet also. Still this growing sector is in need of professional handholding and guidance. ‘The concept behind this investment is to bring in a network of associations, corporate governance oversight, additional investors, and experience with M&Q’ - said Nikhil Shah, senior director of Alvarez & Marshal India, who is also advising several PE players on opportunities in this segment.
Albeit, these businesses are growing and are capable enough to grow faster, the gross margins is expected to be in the span of only 5-6%. This margin can be increased by developing more domain expertise and knowledge to weed out unprofessionalism and inefficiencies.
Synopsis
Given the above scenario of food wastage and poor condition of companies of cold and agri-logistic, it is necessary that this sector needs to be lifted and supported by private equity funds in India. Reacting to the need of the hour, private equity firms in India are staking on the potential scalability of well-organized players in this industry, in spite of rainfall dependent and seasonal nature of the business.
