November 6, 2015
- Total planned equity fund raising by Jain Irrigation Systems Limited (“JISL”) of approx. Rs. 792 Crores (USD 120 million)
- Investment by funds managed by Mandala Capital Limited (“Mandala”), a fund focused exclusively on investing in agribusiness in India
- Investment by Mandala in Jain Farm Fresh Foods Limited (“JFFFL”) of Rs. 396 Crores (USD 60 million) within the pre-money enterprise valuation range of Rs. 2,500 Crores to 3,000 Crores, subject to JFFFL’s performance
- Mandala to get 14.08% or 17.13% stake in JFFFL, subject to its performance
- Investment in JISL by Mandala of Rs285 Crores (USD 43.2million) at Rs. 80 per share through Compulsorily Convertible Debentures at 5 % annual coupon
- Investment in JISL by Promoters of Rs. 111 Crores (USD 16.8million) at Rs. 80 per share through warrants structure
- JISL to use funds to deleverage and grow JFFFL’s business
- JISL to move on path towards net debt:equity ratio of 1:1 over next few quarters
- The entire transaction is expected to be closed by December 2015
Jain Irrigation Systems Ltd. (“JISL”) along with Jain Farm Fresh Foods Limited (“JFFFL”) today announced plans to raise equity of approximatelyUSD 120 million(approximately Rs. 7,920million, at assumption of 1 USD = INR 66.00) with the primarypurpose of accelerating JISL’sbalance sheet strengthening and also providing growth capital for JFFFL, the newly formed, wholly owned subsidiary of JISL under which its global food business will now be organized.
The different parts of the transaction are detailed as follows:
- The Board of Directors of JFFFLmet today and decided to raise USD 60 millionINR equivalent (approximately Rs. 3,960million) from Mandala subject to regulatory requirements. These funds will be raisedby JFFFL making a preferential issue of Equity Shares and Compulsorily Convertible Debentures (“CCDs”) for a total subscription amount ofUSD 60 million INR equivalent (approximately Rs. 3,960million).The CCDs will be converted into further Equity Shares of JFFFL within 60 months from the date of allotment at an issue price determined according to whether JFFFL achieves certain value and revenue targets such that Mandala will receive a minimum stake of 14.08% in JFFFL, upon conversion of the CCDs, if the value and revenue parameters are achieved by JFFFL orwill otherwise receive a maximum stake of 17.13% stake in JFFFL.
- The Securities Issuance Committee of the Board of Directors of JISL met today and decided toraise a further USD 60 million INR equivalent (approximately Rs. 3,960million) in long term capital for JISL, subject to regulatory approvals:
(a) by JISL making a preferential issue ofCompulsorily Convertible Debentures (“CCDs”) with a 5% annual coupon to Mandalafor a subscription amount of approximatelyUSD 43.2 million (approximately Rs. 2,851 million). The CCDswill be converted intoOrdinary Equity Shares of JISL within 18 months from the date of allotment at (i) Rs.80 per share or(ii) suchhigher price per share as is determined in accordance with the applicable SEBI (ICDR) Regulations, 2009; and
(b) by JISL making a preferential issue of Equity Warrants to the Promoters for a total aggregateexercise price of US$16.8 million (approximatelyRs. 1,109 million) to be exercised into the Ordinary Equity shares of JISLwithin 18 months from the date of allotment at (i) Rs. 80 per share or(ii) suchhigher price per share as determined in accordance with the applicable SEBI (ICDR) Regulations, 2009.
3. The proposed fund raising plan is subject to final transaction documents,successful execution of business transfer agreements, completion of satisfactory due diligence and other consents and approvalscustomary for such a transaction including shareholder and lender approvals.
Anil Jain, the Managing Director of JISL said: ″We are delighted to be putting together such a largeequityinvestment from Mandala even in challenging global market conditions. The terms and structure of this transaction will enable JISL to continue with balance sheet strengthening and sustainable growth. The transaction demonstrates, for the first time,the high intrinsicvalue and growth potential of our newly formed global foods vertical, JFFFL.At the high end of the agreed range, the valuation placed on JFFFL by Mandala’s investment in JFFFL is almost equal to the entire current market capitalization of JISL.
This equity issuance is highly value accretive for the company and a game changer. It will create financial capacity for operations and strengthen our balance sheet.This will flow through to annualized savings on interest, a healthier bottom line and contribute to the continued virtuous cycle of further enhancement of our profitability.
Funds will also be utilized to support organic and inorganic growth of our global food business, which has huge medium and long term potential. Through the transaction, JFFFLis well funded for future growth and JISL has retained a very significant shareholding in that growth. This is a very gratifying result for all the associates at JISL, who have worked with huge commitmentover last 2 decades to create aworldclass foods business.
We thank all our stakeholders for their support, as the Company moves from strength to strength.
Dominic Redfern and Uday Garg, the Managing Directors of Mandala released the following statement today: “It’s a pleasure to be working on this transaction with Jain Irrigation Systems and its newly formed subsidiary, Jain Fresh Farm Foods Ltd.During our earlier investment in Jain’s NBFC affiliate, the Sustainable Agro-commercial Finance Company Limited (“SAFL”),we saw that the management team had successfully repositioned JISL’s core business lines for a strong return to growth, and so we decided to increase our investment in the group, in one of the largest foreign direct investments to date in Indian agribusiness.
Jain Farm Fresh Foods Ltd clearly justifies having its own profile within the JISL group. Food processing is at a nascent stage in India and JFFFL is a rare example of a company that has already developed globally significant scale and vertical integration in the sector. We are pleased to be partnering in the future growth of this sector leading business.”
YES Securities, Mumbai acted as exclusive financial advisors to JISL for this transaction.
About Jain Irrigation:
Our Company, Jain Irrigation Systems Limited (JISL) with it’s motto ‘Small Ideas, Big Revolutions’, with more than 10,000 associates worldwide and a revenue of over 60 billion rupees, is an Indian multinational company with manufacturing plants in 28 locations across the globe. It is engaged in manufacturing of Micro Irrigation Systems, PVC Pipes, HDPE Pipes, Plastic Sheets, Agro Processed Products, Renewable Energy solutions, Tissue Culture Plants, Financial Services and other agricultural inputs since last 34 years. It has pioneered a silent Productivity Revolution with modern irrigation systems and innovative technologies in order to save precious water and has helped to get significant increase in crop yields, especially for millions of the small farmers. It has also ushered in new concept of large scale Integrated Irrigation Projects (IIP). ‘More Crop Per Drop™ is the company’s approach to water security and food security. All the products and services of JISL help create a sustainable future while fulfilling its vision ‘Leave this world better than you found it’. JISL is listed in NSE-Mumbai at JISLJALEQS and in BSE at code 500219. Please visit us at www.jains.com.
About Jain Farm Fresh Foods Limited (JFFFL):
JFFFL is one of the world’s largest fruits and vegetable processors. It is the world’s largest mango processor and among the top 3 global onion dehydrators with capabilities to manage different processes such as aseptic, dehydration, IQF and reduced moisture frozen for various products across multiple geographies. JFFFL has proprietary food processing technologies and is a leader in product/process innovations. It has multiple manufacturing and packaging plants across the globe including India, UK and US.
JFFFL has established strong backward linkages across geographies by sourcing majority of fruits and vegetables directly from farmers.JFFFL has a widespread distribution reach with its products being sold in over 40 countries. Majority of the JFFFL customers are global food companies and large Indian food players.
Mandala is the leading private equity firm focusing exclusively on the food and agribusiness sector in India, the largest and fastest-evolving market of its kind in the world. Mandala’s strategy is to provide growth capital and operational partnership to Indian food and agribusiness companies with potential to become leading companies in theirmarket segment on a national, regional or global basis.Mandala partnerswith company leaders with well-directed ambition and a commitment to excellence in all aspects of their business. Mandala uses complex and innovative investment structures tofund, and support the execution ofwell thought out plans for medium- and long-term company growth. Mandala invested its first fund in businesses engaged in seed technology, cold storage and transportation, bio-refining from renewable resources, agribusiness financing, and food and beverage manufacturing. Mandala’s investments in JISL and JFFFL will be the first investments of its second fund.
The information in this release has been included in good faith and is for general purposes only. It should not be relied upon for any specific purpose and no representation or warranty is given as regards to its accuracy or completeness. No information in this press release shall constitute an invitation to invest in Jain Irrigation Systems Limited. Neither Jain Irrigation Systems Limited, nor their or their affiliates' officers, employees or agents shall be liable for any loss, damage or expense arising out of any action taken on the basis of this release, including, without limitation, any loss of profit, indirect, incidental or consequential loss.