Mumbai: Bangalore-based agri processing equipment maker Milltec Machinery Pvt. Ltd is in talks with private equity (PE) investors to raise Rs.150-200 crore in lieu of a minority stake, said three people familiar with the matter, including one directly involved in the discussions. The three declined to be identified.
Milltec has mandated investment bank o3 Capital Global Advisory Pvt. Ltd to advise it on the fund-raising process.
The talks are in preliminary stage and at least three PE firms, including Multiples Alternate Asset Management Pvt. Ltd, are in talks with Milltec, said the person involved in the talks.
“Milltec is talking to various PE players and the deal is at a preliminary stage, not near closure,” said another person cited above.
A mail sent to Renuka Ramnath, founder, managing director and chief executive of Multiples Alternate Asset Management, on Tuesday regarding the transaction did not elicit a response till press time.
V.G.N. Prakash, director-administration and finance, Milltec Machinery, in response to an email from Mint, declined to comment “at this point of time”.
Milltec, a technology provider for rice, roller flour and maize (corn) milling and pulses processing plants, was founded in 1998. “A couple of existing shareholders are selling parts of their stakes. It’s a profitable, fast-growing company and does not have much debt on its books,” said the third person cited above.
Milltec’s fund-raising plans come at a time when investors’ interest in the agri-machinery segment has peaked. So far this year, there have been three deals worth $172.45 million in this space, compared with four deals worth $7.59 million in all of 2011, according to VCCEdge, which tracks investment activity in the country.
In one of the largest deals this year in the agri-machinery segment, International Tractor Ltd (ITL) in October raised at least $100 million by selling a 12.5% stake to PE firm Blackstone Capital Partners (Singapore) VI, an affiliate of Blackstone Group. Hoshiarpur, Punjab-based ITL, the flagship of the Sonalika Group, makes tractors under the Sonalika brand.
Omnivore Capital, an early-stage venture capital fund backed by Godrej Agrovet Ltd, bought a 26% stake in Rajkot-based farm equipment maker Khedut Agro Engineering Pvt. Ltd for an undisclosed sum earlier this year. With food consumption being the most stable and high-growth aspect in the Indian economy, any service that has food as its end product, be it packaging or equipment manufacturing, is of huge interest, say investors.
“As the demand for the end product, be it rice or wheat, increases, the demand for such machines will grow,” said Rajesh Srivastava, chairman and managing director, Rabo Equity Advisors Pvt. Ltd, the country’s first agriculture and food sector-focused PE fund.
Srivastava, who is scouting for potential deals in this space, said it is not easy to find interesting opportunities in the segment as it is highly unorganized. “The overall theme is very strong. So far, people have been importing such machines,” he said.