IDFC Private Equity Invests $30M In Staragri

has invested Rs 150 crore in Jaipur-based Staragri Warehousing and Collateral Management Ltd, a company providing post-harvest management solutions. The funding, also its first in the agriculture space, had been made through IDFC PE Fund III. IDFC Private Equity also acquired a significant minority stake in Staragri, but the stake and the valuation were not disclosed.

Founded in 2006 Staragri specialises in agri commodity warehousing services such as storage, lab testing, collateral management services and procurement services. The company has presence in 10 Indian states and operates around 750 agri commodity warehouses. Staragri has also reported tenfold growth in turnover in the past three years, according to a statement.

Staragri has done collateral financing for commodity portfolio worth Rs 10,000 crore and procured commodities worth Rs 2,000 crore till date. Its promoters include Suresh Goyal (chairman and MD), Amit Mundawala (executive director), Amit Khandelwal (executive director) and Amith Agarwal (executive director).

The funds will be used for expanding high quality warehouse network and also for creating a pan-India footprint in allied services market. This includes expanding the warehousing capacity from the current 10 lakh tonnes to 30 lakh tonnes across 10 states, adding new loan products, spread of retailing and insurance distribution, and expanding lab facilities.

Staragri also plans to add allied services like cold chain, seed and liquid warehousing, agri retailing and farmer clubs as it looks to become an integrated player.

“Staragri’s unique and innovative model not only protects agricultural produce but also connects farmers to centres of consumption and sources of financing. It brings better realisations for farmers and makes available agri-financing at lower cost. Bringing prosperity to farmers is in line with IDFC’s ethos of building India,” said Girish Nadkarni, Partner at IDFC Private Equity. Nadkarni joined the firm in July last year, after spending a decade with the Tata Group. Prior to joining IDFC PE, he was the CFO of the agri business firm Rallis India.

For IDFC Private Equity, this is another investment in the broader infrastructure space. While the PE firm continues to invest in power and transportation, it has also been one of the first movers into areas like social infrastructure (deals like Manipal Universal and Healthcare Global) and urban infrastructure (Doshion). With the Staragri deal, it has also added rural and agri infrastructure to its target areas.

“Agri services business has the potential to bring positive change to 70 per cent of the Indian population who depends on agriculture for livelihood. Agri infrastructure and allied services, such as warehousing, irrigation, mechanisation, logistics, etc., address the core of developing India,” said Satish Mandhana, Managing Partner of IDFC PE.

Private equity deal value in the agricultural space increased between 2007 and 2010, with several sector-focused and generic funds targeting deals in the space (see table). But the value fell in 2011 even though the volume remained similar to that of 2010. Fund managers like Rabo Equity Advisors and SEAF are some of the specialist GPs in this sector.

Recent deals in this space include Peepul Capital’s investment in Sresta Natural Bioproducts and the SEAF India Agribusiness Fund backing Abhay Cotex.

While IDFC PE’s deal with Staragri is reportedly the first PE investment in an integrated, independent post-harvest management company, players like National Collateral Management Services havealso raised funding.