IFC invests $27.5 million in guar gum firm Lucid Colloids

Investment will support the company in expanding capacity by setting up a new guar gum plant in Gujarat

International Finance Corporation (IFC), a member of the World Bank Group, has invested $27.5 million (about Rs 165 crore) in Lucid Colloids to fund expansion plans of Mumbai-based guar gum producer.

Lucid Colloids is a family-owned company manufacturing guar gum and other hydrocolloids and their derivatives. The company has manufacturing plants at Jodhpur in Rajasthan and Aurangabad in Maharashtra.

"IFC has invested $27.5 million to finance the expansion and backward integration plans of Lucid Colloids and support small farmers in India, boosting their productivity and incomes," IFC said in a statement.

The financing comprises compulsorily convertible debentures of $12.5 million and the balance as debt.

The investment will support Lucid in expanding capacity by setting up a new guar gum plant in Gujarat, two guar splitting plants in Rajasthan along with a research and development facility, the statement added.

Guar gum is a thickening and stabilizing agent used in food products, and for industrial applications.

"With this investment, Lucid will be able to source guar from about 40,000 additional farmers a year in the priority state of Rajasthan," IFC said.

Commenting on the development, Lucid Colloids CMD Uday Merchant said: "As we enter the next phase of our growth, IFC's global expertise in the agribusiness sector will help us become globally competitive, strengthen environmental and social standards, and improve corporate governance practices".

IFC's long-term financing will enable the company to withstand price volatility of guar gum, he added.

"Agribusiness is a priority sector for IFC in India," said Vipul Prakash, Director for Manufacturing, Agribusiness and Services, Asia Pacific, IFC.

"By expanding the market for high quality guar, this investment will increase incomes for a large number of guar farmers in India, many of whom are women, particularly in Rajasthan which is a priority state for IFC," Prakash said.

IFC is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, IFC uses its capital, expertise, and influence to help eliminate extreme poverty and boost shared prosperity.

In FY 2014, IFC provided more than $22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development.