KKR, Apollo in race for stake in Godrej Agrovet

The subsidiary of Godrej group is engaged in manufacturing agriculture and poultry based products

The fundraising plan of Godrej Agrovet Limited (GAVL) is turning into a hot race as more private equity players are entering into the fray. In a latest development, global private equity majors -Kohlberg Kravis Roberts (KKR) and Apollo Global management LLC have evinced interest to buy stake in the Mumbai-based Agri-poultry business firm.

According to sources in the know, KKR and Apollo are in early stages of discussion with Godrej Agrovet management and more private equity players have shown interest for the stake. Other names could not be ascertained yet.

The subsidiary of Godrej group which is engaged in manufacturing agriculture and poultry based products, is looking to raise about Rs 500-600 crore by diluting about 15-20% stake. The proposed fund will be used for a few outbound acquisitions and capacity expansion, it is learnt.

The Rs 2,500-crore company is known for brands such as Real Good Chicken and Yummiez brands.

When contacted, a KKR spokesperson said that the company does not comment on market speculation, while a spokesperson of Apollo Global management declined to comment. A Godrej Agrovet spokesperson said, "We do not comment on rumours or speculation."

"This would be a good opportunity for PE investors who look for larger investment in India, as such kind of big-ticket deals are rarely happening in current scenario. Also, this diversified company would be a sure bet for India-focused private equity investors," said an investment banker.

 In last five years, the country’s agriculture sector saw 35 PE/VC (venture capital) deals, worth $356 million. So far this year, only three deals, worth $15 million, have been recorded in the sector, compared with six, worth $24 million, last year.

GAVL, a subsidiary of Godrej Industries, operates in 4 business areas-Agri Input, Animal Feed, Oil Palm & Plant Biotech and Godrej Tyson Foods.

Under animal feed business, GAVL produces over 9.5 lakh tons annually of feed and nutrition products for dairy cattle, poultry & aquaculture. The oil palm plantation business has over 44900 hectares of smallholder cultivation across AP, Goa, Gujarat, Orissa, Tamil Nadu, Karnataka and Maharashtra.

GAVL claims to have 45% market share of Indian processed poultry business with its leading brand- Real Good Chicken. GAVL’s poultry division has joined hands with Tyson Foods, the US-based leading meat processor and marketer. The $3.5-billion Indian poultry industry is the fourth largest producer of chicken meat in the world after the US, China and Brazil.

Godrej Agrovet has 45 manufacturing facilities across India, a network of 10,000 rural distributors, and over 1900 employees, according to a company statement.

KKR, which made investments of more than $1 billion in India, own stake in portfolios such as Magma Fincorp, Bharti Infratel, Café Coffee Day, Dalmia Cement and Avanta Power.

Apollo, which started Indian operations about 4 years ago, had announced an investment worth $500 million in Welspun Group last year. Apollo also handles a real estate investment arm, Apollo Real Estate

Advisors, which runs a $630-million real estate private equity fund-Sun Apollo in India in partnership with Sun group, owned by Delhi-based Khemka family.