Karuturi eyes $150M fundraise for Africa push

Venture Capital Circle | July 07 2010


Karuturi is in active discussions with at least 5 investors for a fund raise at both entity and subsidiary level.

India's largest rose exporter Karuturi Global Ltd is in active discussions with various investors to raise around $150 million as it pushes for expansion in Africa. The Bangalore-based firm is at term sheet level discussions with at least four to five investors and private equity funds to raise the amount, which may see an equity infusion at entity and subsidiary levels, said sources. The entire amount of $150 million could be raised through a mix of equity and debt funding.

Karuturi Global is likely to raise the equity funding from a consortium of 3-4 investors, said a source involved in the transaction. These funds could be raised at the listed entity level, Karuturi Global, or Karuturi Overseas Ltd, the holding company for Africa operations. One source said that Karuturi Global may raise funding at both levels, with most of funds coming in at the Dubai-based subsidiary Karuturi Overseas level.

While the identity of all the likely investors could not be ascertained, private equity firms like Rabo Equity Advisors and IL&FS Investment Managers may be in talks with Karuturi, said a source familiar with the development.

"I will not deny the suggestion but refuse to confirm it," said Sai Ramakrishna Karuturi, managing director of Karuturi Global, in an email response. An email sent to IL&FS did not elicit a response at the time of publication of this article.

Karuturi was quoted today in a PTI report saying that the company plans to invest $100 million for setting up a 7,000-tonnes per day capacity sugar-cane crushing plant in Ethiopia. One source said that Karuturi has already started mopping up debt for the project, which includes a $20 million term loan from ICICI Bank.

An earlier report had indicated that Standard Chartered Bank's Africa private equity arm and a unit of Reliance Capital are in talks to invest in Karuturi Overseas.

The fund-raising talks were initiated back in 2008 by Karuturi Global. Karuturi is betting on the growth story that is developing in Africa, where many investors and corporates are buying and leasing land at relatively cheaper rates for crop production.

Karuturi has acquired vast tracts of land in Ethiopia for its foray into agriculture, which it believes will be its next driver of growth.

The Bangalore-based company had earmarked a capital expenditure of $250-$300 million to fund its land acquisition in Ethiopia. While debt has been raised from the banks, the company now needs an equity infusion to meet the capex requirement. Karuturi bought around 311,700 hectares of land on lease in Ethiopia to start agricultural cultivation in a phased manner. It plans to grow crops like cereals, sugar and palm, which could be exported.

Karuturi, whose rose export accounts for most of its revenues right now, annually produces around 555 million stems of cut roses which are exported to markets like the US, Europe, Japan, Russia and Australia. It has an area of 239 hectares in countries like Kenya, Ethiopia and India under green house for this. The company became the world's largest rose exporter after it acquired Ethiopia’s Sher Agencies for $68 million back in 2007.

Karuturi Global reported an increase in revenues in FY10 to Rs 532 crore from Rs 445 crore, and a rise in et profit to Rs 146.5 crore from Rs 117 crore for FY09.

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