The bank in collaboration with International Finance Corporation (IFC), Dutch bank Finance for Development (FMO) and DEG, a member of KfW banking group, will focus on value-added private equity investments mainly in small and medium enterprises in rural areas.
Rabobank will provide 25 per cent of the capital with IFC, DEG and FMO investing $20 million each, balance being tied up with private investors.
The fund will invest in more than 38 sub-sectors of food and agri-business as well as in farm-infrastructure like warehousing and cold storage.
This is the first private equity focused at farm sector in India, Rabo India Finance Managing Director Finance Rajesh Srivastava said here.
He said the fund expects a modest return of around 20 per cent as being the first of its kind, it has no benchmark to compare itself with.
The Mauritius-based fund will cater to unlisted entities and not the listed ones, with main focus on rural areas, he added.
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The bank is also in talks with other companies involved in biotechnology, edible oils, dairy and food ingredients, he said.
Rabobank already has such food and agri funds in Australia and New Zealand which are garnering a return of more than 20 per cent.