Netafim India subsidiary raises $40 million funding from Israeli firms
The Navi Mumba-based company will utilise the capital raised for funding business expansion, product enhancements and market diversification in the agri-rural domain. The investment would also help NAFA improve its margins as it seeks to reduce the overall cost of funds on its books by servicing high-cost old debt.
Commenting on the development, Lauri A Hanover, CFO, Netafim, said, “While the sector is still highly fragmented, the demand for credit in agriculture is largely unmet through formal financial institutions. Being the innovator of drip irrigation and the world leader in precision irrigation serving customers for more than 57 years across the globe, the equity infusion in NAFA is aligned with our core of supporting customers in adopting precision irrigation and automation solutions in agriculture.”
Hanover added that that the equity infusion would help NAFA strengthen its capital adequacy and further expand its market presence.
This is the second equity infusion into NAFA that recently raised $9.4 million of Tier-I Capital from Netafim Singapore and offered exit to the initial equity partners Atmaram Properties and Granite Hill Fund as they had reached their investment horizon.
This also happens to be the maiden investment for both Phoenix Group and Cogito Capital in India and NAFA through the acquisition of a stake in Netafim Singapore.
Immense Growth PotentialThe Central Government has targeted to double farmers’ income in the country by 2022. In September 2020, India passed three farm laws to boost investments in the sector through the strengthening of the agriculture supply chains, creation of better market linkages and transformation of agriculture from subsistence to a more commercially oriented profession.
It is against this backdrop that agricultural financing and technology players like Netafim sense immense potential in the country’s farm sector.
In this regard, Prabhat Chaturvedi, CEO, NAFA, observed, “The advent of intensive and climate-resilient agricultural technologies has further amplified the need for good financing schemes. Despite the presence of multiple financial mediums, there aren’t enough credit products catering to the niche demands of the farmers, leading to a huge credit gap. In India, there is a need for diversified credit schemes, along with adequate handholding, to provide financial guidance to farmers on investing in agriculture and allied activities.”
Guy Zukin, Managing Partner, Cogito Capital, remarked, “Cogito is excited to be teaming up with Netafim – the global irrigation leader and pioneer – and Phoenix Insurance, one of Israel’s leading insurance companies, in providing growth capital to NAFA. We are looking forward to cooperating with our partners in supporting NAFA’s continued journey in realising the potential in the Indian agricultural NBFC market.”
Ofer Aviran, Head of Direct and Infrastructure Investments of Phoenix Group, commented, “We are very proud to partner with Netafim and Cogito in investing in NAFA. Netafim’s prominent presence in emerging markets and their professionalism in such an important field of agricultural infrastructure development and food production constitute fertile ground for continued cooperation for the benefit of all parties.”
This investment will help NAFA to further enhance its credit lending portfolio and expand horizons within the agricultural-rural domain beyond micro-irrigation to reach more clients engaged in agriculture and allied sectors.
Since acquiring the NBFC license from the RBI in 2013, the company has established its presence in 8 states and disbursed loans worth over Rs 10 billion to more than 10,000 customers. Among these, more than 60% are small and marginal farmers. It is now looking at expanding this network by diversifying into allied activities to service customers’ long-term credit needs.
- MANISH PANT