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KKR, Apollo eye stake in Godrej Agrovet

Reghu Balakrishnan/Mumbai 29 Oct 12 | 12:34 AM

The fundraising plan of Godrej Agrovet Ltd (GAVL) is set to witness a hot race, with more private equity (PE) companies entering the fray.

Global PE majors Kohlberg Kravis Roberts (KKR) and Apollo Global Management LLC have shown interest in buying a stake in the Mumbai-based agri-poultry business firm. According to sources, KKR and Apollo are in early stages of discussion with the Godrej Agrovet management and more PE agencies have also shown interest. Other names could not be ascertained.

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GAVL, subsidiary of the Godrej Group and manufacturing agriculture and poultry-based products, is looking to raise Rs 500-600 crore by diluting 15-20 per cent stake. The proposed fund will be used for a few outbound acquisitions and capacity expansion, it is learnt. The Rs 2,500-crore company is known for brands such as Real Good Chicken and Yummiez brands.

When spoken to, a KKR spokesperson said the company would not comment on market speculation, while a spokesperson of Apollo Global’s management declined to comment. A Godrej Agrovet spokesperson said, "We do not comment on rumours or speculations."

"This would be a good opportunity for PE investors who look for larger investment in India, as such big-ticket deals are rarely happening in the current scenario. Also, this diversified company would be a sure bet for India-focused PE investors," said an investment banker.

In the past five years, the agriculture sector saw 35 PE/VC (venture capital) deals, worth $356 million. So far this year, only three deals, worth a combined $15 mn, have been recorded in the sector, compared with six, worth $24 mn, last year.

GAVL, a subsidiary of Godrej Industries, operates in four business areas -- agri inputs, animal feed, oil palm & plant biotech and Godrej Tyson Foods.

It has 45 manufacturing facilities across India, a network of 10,000 rural distributors, and 1,900 employees.

Under the animal feed business, GAVL produces 950,000 tonnes annually of feed and nutrition products for dairy cattle, poultry & aquaculture.

The oil palm plantation business has 44,900 hectares of smallholder cultivation across AP, Goa, Gujarat, Orissa, Tamil Nadu, Karnataka and Maharashtra.

GAVL claims to have 45 per cent market share of the Indian processed poultry business, with its leading Real Good Chicken brand. The poultry division has joined hands with Tyson Foods, the US-based leading meat processor and marketer. The $3.5-billion Indian poultry industry is the fourth largest producer of chicken meat in the world, after America, China and Brazil.

KKR, which has made investments of a little more than $1 billion in India, owns stake in portfolios such as Magma Fincorp, Bharti Infratel, Café Coffee Day, Dalmia Cement and Avanta Power.

Apollo, which began Indian operations about four years earlier, had announced an investment worth $500 million in the Welspun Group last year. It also handles a real estate investment arm, Apollo Real Estate Advisors, which runs a $630-mn private equity fund, Sun Apollo, in India in partnership with the Sun group, owned by the Delhi-based Khemka family.

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