Netafim Agricultural Financing Agency Pvt Ltd (NAFA) has raised about $50 million via a mix of equity financing and external commercial borrowing (ECB).
NAFA has secured $40 million in ECB from Israel-based Phoenix Group and Cogito Capital, and $9.4 million Tier I Capital as fresh equity infusion from parent Netafim Singapore.
As part of the deal, initial equity partners Atmaram Properties and Granite Hill Fund have exited NAFA.
The proceeds will be used for business expansion. They will also help the company to improve margins by bringing down the overall cost of funds.
This is the maiden investment for both Phoenix Group and Cogito Capital in India and NAFA.
Since acquiring an NBFC licence in 2013, NAFA has established its presence in 8 states and disbursed total loans worth over Rs 1,000 plus crore to 10,000 customers, more than 60% of them small and marginal farmers. The company now aims to expand this network and diversify to allied activities for customers’ long-term credit needs.
Lauri A Hanover, chief financial officer, Netafim Singapore, said, “In the aftermath of Covid, India is gearing up for self-reliance with an emphasis on the agri-rural economy and its rapid modernisation. 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."
Prabhat Chaturvedi, CEO of NAFA, said, “Indian agriculture, in general, is characterised by low and uncertain returns as it is more prone to natural calamities and varied risks, resulting in constant demand for agri-financing support. The advent of intensive and climate-resilient agricultural technologies has further amplified the need for good financing schemes.”