Investor appetite for food, agri biz gets dampened; hits 5-yr low

Investors’ appetite for food and agri businesses got dampened significantly this year with just 62 private equity deals worth US$ 250 million, the lowest in value terms over the last five years, says a report.
According to a PTI report: The fall in food tech and online grocery deal value has resulted in the decline in transactions in this space, as reported by News CorpVCCEdge, the financial research platform of News Corp VCCircle.
So far this year, there were 62 PE deals worth US$ 250 million in the food and agri space, while in the previous year a total of 153 deals worth US$ 1,154 million were inked.
“After the irrational exuberance in 2015, self-correction this year has come in as boon. It gives entrepreneurs in food, agri and consumer business space to recalibrate their models and desist from ‘me too’ ideas to realign themselves with the evaluation criteria of investors,” Head -India New Ventures, News Corp and CEO, News Corp VCCircle, Nita Kapoor was quoted by PTI as saying.
Segment-wise, agri farming and processing attracted maximum investments in 2016 with six deals amounting to US$ 79 million, while food tech and online groceries registered only 33 deals worth US$ 67 million in 2016 and packaged foods segment witnessed 9 deals worth US$ 42 million.
“Packaged foods is a segment which will see investors’ interest in the future due to growth drivers like rising penetration of organised retail, changing urban lifestyle and increasing preference for convenient & hygienic food options,” Kapoor was quoted by PTI as saying.
Dairy and poultry sector has been the only segment to witness a growth of 120 per cent with investments amounting to US$ 33 million in 2016 in two deals, the report said.
In the agri farming and processing space, India Value Fund Advisors’ investment of US$ 40 million into the Hyderabad based Seedworks International topped the deal chart this year, followed by International Finance Corp’s investment of US$ 20 million in Kishore Biyani’s Future Consumer Enterprises.
Going forward, Kapoor was quoted by PTI as saying, “In the agro space, the ability to scale up along with infrastructural development of cold chains, warehousing, farm equipment etc are factors that would determine investors’ attraction in the future.”