Investors' appetite for food and agribusinesses got dampened significantly this year with just 62 private equity deals worth $250 million, the lowest in value terms over the last five years, says a report.
The fall in food tech and online grocery deal value has resulted in the decline in transactions in this space, according to a report by News CorpVCCEdge, the financial research platform of News Corp VCCircle.
So far this year, there were 62 PE deals worth $250 million in the food and agri space, while in the previous year a total of 153 deals worth $1154 million were inked.
"After the irrational exuberance in 2015, self-correction this year has come in as boon. It gives entrepreneurs in food, agri and consumer business space to recalibrate their models and desist from 'me too' ideas to realign themselves with the evaluation criteria of investors," said Nita Kapoor, Head -India New Ventures, News Corp and CEO, News Corp VCCircle.
Segment-wise, agri farming and processing attracted maximum investments in 2016 with six deals amounting to $79 million, while food tech and online groceries registered only 33 deals worth $67 million in 2016 and packaged foods segment witnessed 9 deals worth $42 million.
"Packaged foods is a segment which will see investors' interest in the future due to growth drivers like rising penetration of organised retail, changing urban lifestyle and increasing preference for convenient & hygienic food options," Kapoor said.
Dairy and poultry sector has been the only segment to witness a growth of 120 percent with investments amounting to $33 million in 2016 in two deals, the report said.
In the agri farming and processing space, India Value Fund Advisors' investment of $40 million into the Hyderabad based Seedworks International topped the deal chart this year, followed by International Finance Corp's investment of $20 million in Kishore Biyani's Future Consumer Enterprises.
Going forward, Kapoor said, "in the agro space, the ability to scale up along with infrastructural development of cold chains, warehousing, farm equipment etc are factors that would determine investors' attraction in the future."
The fall in food tech and online grocery deal value has resulted in the decline in transactions in this space, according to a report by News CorpVCCEdge, the financial research platform of News Corp VCCircle.
So far this year, there were 62 PE deals worth $250 million in the food and agri space, while in the previous year a total of 153 deals worth $1154 million were inked.
"After the irrational exuberance in 2015, self-correction this year has come in as boon. It gives entrepreneurs in food, agri and consumer business space to recalibrate their models and desist from 'me too' ideas to realign themselves with the evaluation criteria of investors," said Nita Kapoor, Head -India New Ventures, News Corp and CEO, News Corp VCCircle.
Segment-wise, agri farming and processing attracted maximum investments in 2016 with six deals amounting to $79 million, while food tech and online groceries registered only 33 deals worth $67 million in 2016 and packaged foods segment witnessed 9 deals worth $42 million.
"Packaged foods is a segment which will see investors' interest in the future due to growth drivers like rising penetration of organised retail, changing urban lifestyle and increasing preference for convenient & hygienic food options," Kapoor said.
Dairy and poultry sector has been the only segment to witness a growth of 120 percent with investments amounting to $33 million in 2016 in two deals, the report said.
In the agri farming and processing space, India Value Fund Advisors' investment of $40 million into the Hyderabad based Seedworks International topped the deal chart this year, followed by International Finance Corp's investment of $20 million in Kishore Biyani's Future Consumer Enterprises.
Going forward, Kapoor said, "in the agro space, the ability to scale up along with infrastructural development of cold chains, warehousing, farm equipment etc are factors that would determine investors' attraction in the future."