Listed firm LT Foods Ltd, best known for its packaged rice brand Daawat, is raising Rs 140 crore (around $20 million at current exchange rates) in fresh funding from existing investor Rabo Equity Advisors for its wholly-owned unit Nature Big Foods Ltd.
Nature Big Foods produces organic items and is one of LT Foods’ fastest-growing business units.
In a stock-market disclosure, LT Foods said that its board of directors had approved Rabo Equity’s investment, which will take place via several tranches.
Rabo Equity is a private equity firm which focuses on the Indian agriculture and food sector. It had previously backed Daawat Foods Ltd, another subsidiary of LT Foods.
VCCircle had reported in June that Rabo Equity would invest in Nature Big Foods.
Nature Bio Foods, which was launched in 1998, offers organic produce in categories such as basmati and non-basmati rice, pulses, oil seeds, cereal grains, spices, nuts, fruits and vegetables.
The unit claims to have one of the largest procurement ecosystems for organic foods, comprising approximately 80,000 farmers cultivating 1.5 lakh hectares of land across 15 states. Organic pulses and non-basmati rice were the major contributors to business growth during the financial year 2016-17.
According to LT Foods’ annual report for 2016-17, Nature Bio Foods has been one of its fastest-growing subsidiaries. It recorded a compound annual growth rate (CAGR) of 44% between 2011-12 and 2016-17, and contributed Rs 240 crore to the top line in 2016-17. It is estimated to have become a Rs 300-crore unit in 2017-18.
LT Foods manufactures and exports products under three broad verticals: value-added products, organic food and international trading under brands such as Daawat, Royal, Devaaya, Heritage, Rozana and Chef’s Secretz.
In a bid to ramp up its export business, the company had inked a deal in 2016 to buy the rice export business from consumer goods major Hindustan Unilever Ltd.
The company’s consolidated revenue stood at Rs 3,286 crore in 2016-17, up from Rs 2,978 crore in the previous fiscal. Its net profit rose to 128.6 crore from Rs 72.4 crore during the same period.
Rabo Equity
Headed by chairman and managing director Rajesh Srivastava, the PE firm has struck a couple of deals over the past year. In June, it backed Naturell India Pvt. Ltd, which makes nutrition bars under the Rite Bite brand.
Late last year, the PE firm had invested in Mumbai-based Olive Bar and Kitchen Pvt. Ltd after buying a significant stake in the restaurant chain from Aditya Birla Private Equity and a few other investors.
Rabo’s earlier investments from its $200-million second fund include Cremica Food Industries, Global Gourmet and Parijat Industries India.
Last month, VCCircle reported that the homegrown PE firm had exercised a put option to initiate the process of exiting its eight-year-old investment in packaging materials maker Vacmet India Ltd.
Rabo has struck a few exits from its debut $120-million fund.
These include stake sales in National Collateral, which was acquired by Fairfax India; Geepee Agri Pvt. Ltd and Sri Biotech.
It also clocked partial exits from Global Green (via a share buyback) and Prabhat Dairy (via an initial public offering).