Rabobank plans food equity fund

Plans to float another subsidiary to enter the booming consumer finance business.

Rabobank International is set to launch India's first food and agriculture private equity fund with an initial corpus of $50 million (around Rs 225 crore). The bank is planning to float another subsidiary to enter the country's booming consumer finance business.

The proprietary private equity fund will invest in companies in the sector, including those dealing with food processing, cold storage and logistics.

"We will look at a 'significant minority' stake in companies for investment and within one year, we expect to increase the fund size to $100 million," Fergus J Murphy, Rabobank International's head of Asia region, told Business Standard.

The bank is also in talks with the central and state governments for providing advisory support and expertise to state co-operative banks for their revival.

"We have met food ministry officials at the Centre and will look at working with the central and state governments for the revival of state co-operative banks," Murphy said.

He added that Rabobank, being a co-operative bank with global expertise, was well placed to use opportunities in the co-operative sector.

'We may look at acquiring stakes in a few state co-operative banks that we will be providing advisory services to,' Murphy said elaborating the Rabobank's strategy.

'Given the current regulatory framework, we are looking at organic growth through our finance company here. Next year, we will also consider setting up another finance company to tap opportunities in the growing consumer finance business,' Murphy said adding that the consumer finance subsidiary could be set up as a 50:50 venture with a local partner.

The bank had, in August, received its merchant banking licence. It is now planning to significantly increase its debt and capital market operations in the country.

'Many Indian companies are looking to diversify funding and that gives us a significant opportunity,' Murphy said. Rabobank operates in India through its 100 per cent subsidiary Rabo India Finance. The bank also has a 19.88 per cent stake in Yes Bank.

Rabo India Finance is focused on food and agriculture, telecom and entertainment. The company has grown to $1.1 billion in business size with foreign currency operations accounting for nearly half of its business.