NEW YORK, OCTOBER 5, 2018: Mandala Capital, in collaboration with The Chamber of Commerce and Industry, Invest India, the Government of India, and the Government of Gujarat hosted the first Food and Agriculture Investor Meet symposium at the Office of the Consulate General of India, New York.
The event was the first of its kind to bring together the perspectives of institutional investors, family offices and private equity with government officials and several of India’s leading companies across multiple segments of the food supply value chain. The Government of Gujarat and Avalon Consulting provided an overview of Indian food and agriculture as an investment destination, highlighting the compelling and unique intersection of demography, consumption habits, supply/demand imbalance, and public policy that make the sector a special opportunity, globally, for stable, scalable and sustainable medium and long term growth.
The food industry opportunity ranges across many sub-sectors, allied sectors, agribusiness and food services to include packaged food, fruits and vegetables, warehousing, food packaging, contract farming, and food ingredients. Demographic and lifestyle changes along with increasing purchasing power will drive growth in meat, poultry, dairy, and processed food.
Presentations from some of Mandala’s portfolio companies, including Godavari Biorefineries and Jain Farm Fresh Foods, as well as presentations from Amul and Nekkanti Seafoods illustrated how the dual demand drivers of population growth and food demand increasing between 8 and 10% pa have created a generational opportunity for companies in food and agribusiness to serve domestic and export markets.
These dynamics have been at the core of Mandala’s investment thesis since the firm’s founding. Mandala outlined how growth equity investments characteristic of its portfolio and private equity can capture this opportunity at an ideal inflection point where many of the risks associated with capital exposure during the early stages of investing have been obviated. Proceeds can be carefully allocated towards capacity building initiatives such as state of the art manufacturing and processing facilities that target the growth dynamics in the market and ensure the integration of state of the art technologies, systems, and processes that enable safe food delivery in an environmentally sustainable manner.
Commercially, Mandala’s experience has demonstrated how growth equity investments provide companies in the sector the opportunity to take advantage of local resources (eg, a large coastline in the case of seafood) to further develop a manufacturing platform to serve expansion to export markets, as well as domestic.
Mandala’s portfolio reflects only a fraction of a much larger multi-billion dollar private equity opportunity in Indian food processing and agribusiness that was the central theme of all presentations during the event. This opportunity is ripe now and is not expected to dissipate anytime in the next 20 years, if not longer. Private equity players who seek this exposure will benefit from more evolved capital structures and well vetted valuation metrics, which have been defining characteristics of Mandala’s investments.
Within the framework of larger scale growth equity investments, there was also discussion of the significant opportunity for the introduction of new product development and technology integration. Growth equity investments that deliver capacity to the sector will fuel the opportunity for technology—either homegrown in India or from overseas—to improve efficiencies within each segment of the food supply chain.
Barry Schiffman is a member of the Board of Directors of Mandala Capital and has been closely affiliated to Mandala since inception. Barry has been an advisor and actively involved across Mandala’s operations including fundraising, legal, ESG and organisational support. He was co-founder of Next Frontier Capital Ltd, an Emerging Markets private equity and investment advisory firm. He was also co-founder, COO, Director, and General Counsel at Viewdle (acquired by Google) and has worked at leading international law firms. He has served on the Boards of various private companies and philanthropies. Barry received a BA in government from Georgetown University, Magna Cum Laude, and a law degree from Georgetown University Law Center.