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NAFA funding

Netafim Agricultural Financing Agency Pvt. Ltd. (NAFA) announced that it has raised $40 million through external commercial borrowing (ECB) from Israel-based investors Phoenix Group and Cogito Capita.

The freshly raised funds will be used for expanding business, improved offerings, and scaling horizons in the agri-rural domain. The company would successfully increase its margins as it plans to service the high-cost old debt and reduce the overall cost of funds.

The transaction marks a new equity infusion into NAFA, which recently raised USD 9.4 million of Tier I Capital from Netafim Singapore and proposed exit to the initial equity partners Atmaram Properties & Granite Hill Fund as they had reached their investment horizon.

This is the first investment for both Phoenix Group and Cogito Capital in India and NAFA, via acquiring a stake in Netafim Singapore.

 Since obtaining an NBFC license from RBI in 2013, NAFA has built its presence in 8 states and distributed loans worth over Rs. 1000 crores to 10,000+ customers. Among these, over 60% of farmers are small & marginal farmers. The company now aims to grow this network and expand to related activities for customers’ long-term credit needs.

 Speaking about the investment, Lauri A. Hanover, CFO, Netafim said, “In the aftermath of Covid, India is gearing up for self-reliance with emphasis on the agri-rural economy and its rapid modernization. While the sector is still highly fragmented, the demand for credit in agriculture is largely unmet through formal financial institutions. Being the innovator of drip irrigation and the world leader in precision irrigation serving customers for more than 57 years across the globe, the equity infusion in NAFA is aligned with our core of supporting customers in adopting precision irrigation and automation solutions in agriculture. This equity infusion will help NAFA strengthen its capital adequacy and further expand its market presence. We are delighted to partner with The Phoenix Group and Cogito Capital in their maiden investment in India and NAFA.”

Prabhat Chaturvedi, CEO, Netafim Agricultural Financing Agency Pvt. Ltd. added, “Indian agriculture, in general, is characterized by low and uncertain returns as they are more prone to natural calamities and varied risks, resulting in constant demand for agri-financing support. The advent of intensive and climate-resilient agricultural technologies has further amplified the need for good financing schemes. Despite the presence of multiple financial mediums, there aren’t enough credit products catering to the niche demands of the farmers, leading to a huge credit gap. In India, there is a need for diversified credit schemes, along with adequate handholding, to provide financial guidance to farmers on investing in agriculture and allied activities.

NAFA has been serving this sector efficiently during the past decade, understanding their needs and providing them with the right financial assistance. With this investment, NAFA will further enhance its credit lending portfolio and expand horizons within the agri-rural domain beyond micro-irrigation. We are bullish about our growth and are excited to cater to the capital needs of the agriculture and allied sector. The said capital would help us strengthen our market position and reach the communities in a much broader way.”

Guy Zukin – Managing Partner, Cogito Capital said, “Cogito is excited to be teaming up with Netafim (the global irrigation leader and pioneer), and Phoenix Insurance (one of Israel’s leading insurance companies), in providing growth capital to NAFA. We are looking forward to cooperating with our partners in supporting NAFA’s continued journey in realizing the potential in the Indian agricultural NBFC market. This investment matches Cogito’s strategy of making investments alongside strong partners, focusing on high growth and adjusted risk opportunities.”

The freshly infused capital will present huge opportunities for NAFA to expand its business and improve margins.

Shishir Gupta, Founder and CEO, StartupLanes

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