Jain Irrigation Systems (JISL) will raise ₹792 crore by diluting stake to funds managed by Mandala Capital , a company focused on investing in agri-businesses in India.

Mandala will invest ₹396 crore in Jain Farm Fresh Foods (JFFFL), the newly-formed, wholly owned subsidiary of Jain Irrigation, within the pre-money enterprise valuation range of ₹2,500 crore.

Debentures, conversion

Mandala will invest another ₹285 crore in JISL at ₹80 a share through compulsorily convertible debentures (CCDs) at 5 per cent annual coupon. This will be done along with an investment of ₹111 crore in JISL by its existing promoters at ₹80 a share through warrant structure. JISL will use the funds to de-leverage and grow JFFFL’s business. The entire transaction is expected to be closed in December.

The CCDs will be converted into further equity shares of JFFFL within 60 months from the date of allotment. The issue price will be fixed based on whether JFFFL achieves certain value and revenue targets so that Mandala would receive a minimum stake of 14.08 per cent in the company. Otherwise, Mandala will receive a maximum stake of 17.13 per cent stake in JFFFL.

Strengthening move

Anil Jain, Managing Director of JISL, said: “We are delighted to be putting together such a large equity investment from Mandala even in challenging global market conditions. The terms and structure of this transaction will enable JISL to continue with balance sheet strengthening. The valuation placed on JFFFL by Mandala’s investment in JFFFL is almost equal to the entire current market capitalisation of JISL,” he added.

The funds will also be utilised to support organic and inorganic growth of the company’s global food business.

Related Topics