Netafim-backed NAFA raises USD 50 mn via Equity and ECB

  Netafim Agricultural Financing Agency Pvt. Ltd. (NAFA), an agri-focused NBFC and a subsidiary of Netafim Singapore, has raised USD 40 million via external commercial borrowing (ECB) from the Phoenix Group and Cogito Capital, both Israel based investors. The raised funds will be utilized effectively for business expansion, enhanced offerings, and to expand horizons in the agri-rural domain. The company would successfully improve its margins as it intends to service the high-cost old debt and bring down the overall cost of funds.

The deal also marks fresh equity infusion into NAFA, which recently raised USD 9.4 million of Tier I Capital from Netafim Singapore and offered exit to the initial equity partners Atmaram Properties Granite Hill Fund as they had reached their investment horizon. This is the maiden investment for both Phoenix Group and Cogito Capital in India and NAFA, through acquiring stake in Netafim Singapore.

Since acquiring NBFC license from RBI in 2013, NAFA has established its presence in 08 states and disbursed total loans worth Rs. 1000+ crores to 10,000+ customers. Among these, more than 60% of farmers are small farmers & marginal farmers. The company now aspires to expand this network and diversify to allied activities for customers’ long-term credit needs. While commenting on the development Lauri A. Hanover, CFO, Netafim said, “In the aftermath of Covid, India is gearing up for self-reliance with emphasis on the agri-rural economy and its rapid modernization. While the sector is still highly fragmented, the demand for credit in agriculture is largely unmet through formal financial institutions. Being the innovator of drip irrigation and the world leader in precision irrigation serving customers for more than 57 years across the globe, the equity infusion in NAFA is aligned with our core of supporting customers in adopting precision irrigation and automation solutions in agriculture. This equity infusion will help NAFA strengthen its capital adequacy and further expand its market presence.

We are delighted to partner with The Phoenix Group and Cogito Capital in their maiden investment in India and NAFA.” Prabhat Chaturvedi, CEO, Netafim Agricultural Financing Agency Pvt. Ltd. elaborated on the company’s plans and said, “Indian agriculture, in general, is characterized by low and uncertain returns as they are more prone to natural calamities and varied risks, resulting in constant demand for agri-financing support. The advent of intensive and climate-resilient agricultural technologies has further amplified the need for good financing schemes. Despite the presence of multiple financial mediums, there aren’t enough credit products catering to the niche demands of the farmers, leading to a huge credit gap. In India, there is a need for diversified credit schemes, along with adequate handholding, to provide financial guidance to farmers on investing in agriculture and allied activities.

NAFA has been serving this sector efficiently during the past decade, understanding their needs and providing them with the right financial assistance. With this investment, NAFA will further enhance its credit lending portfolio and expand horizons within the agri-rural domain beyond micro-irrigation. We are bullish about our growth and are excited to cater to the capital needs of the agriculture and allied sector. The said capital would help us strengthen our market position and reach the communities in a much broader way.”

Guy Zukin – Managing Partner, Cogito Capital said, “Cogito is excited to be teaming up with Netafim (the global irrigation leader and pioneer), and Phoenix Insurance (one of Israel’s leading insurance companies), in providing growth capital to NAFA. We are looking forward to co-operating with our partners in supporting NAFA’s continued journey in realizing the potential in the Indian agricultural NBFC market. This investment matches Cogito’s strategy of making investments alongside strong partners, focusing on high growth and adjusted risk opportunities.” Ofer Aviran, Head of Direct and Infrastructure Investments of Phoenix Group commented, "We are very proud to partner with Netafim and Cogito in investing in NAFA.  Netafim's prominent presence in emerging markets, and their professionalism in such an important field of agricultural infrastructure development and food production constitute fertile ground for continued cooperation for the benefit of all parties. I would like to thank Lauri Hanover, Netafim's CFO, for without her vision, this complex investment would not have come to fruition".

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