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Dodla Dairy raises $50 million from TPG Capital arm

LiveMint logoLiveMint 04-05-2017 Anuradha Choudhary

Mumbai: Dodla Dairy Ltd has secured $50million (about Rs321 crore) in funding from TPG Growth, the growth-capital fund of US private equity firm TPG Capital Inc., according to a press statement.

The transaction was routed through TPG Growth-managed Rise Fund, which invests in the education, energy, food and agriculture, financial services and healthcare sectors. Rise Fund’s investment in Hyderabad-based Dodla Dairy is its first in India, as well as in the food and agriculture sector.

Joy Basu leads the food and agriculture sector team at Rise Fund.

The deal is subject to regulatory approvals. The company did not provide any information on how much stake TPG has picked up in Dodla Dairy.

Mint had reported in March this year, citing unidentified people, that TPG Growth is set to buy a 25% equity stake in Dodla Dairy from US-based investment firm Proterra Investment Partners (formerly Black River Asset Management) in a deal worth Rs300 crore.

Black River Capital Partners (Food) Fund had acquired the stake in Dodla Dairy for Rs110 crore in 2012.

Mint had also reported in May last year that Proterra had started discussions with private equity firms to sell its stake in Dodla Dairy and appointed Edelweiss Financial Services to run the sale process.

It could not be immediately ascertained whether TPG bought the stake from Proterra in the latest transaction. Queries emailed to Dodla Dairy and TPG Growth did not elicit any response.

Mint had reported in March this year that several private equity (PE) funds, including Tata Opportunities Fund, had shown interest in Dodla Dairy and discussions had taken place.

Proterra Investment Partners was also in talks with global and domestic PE funds Temasek, Kedaara, Multiples and ADV Partners to sell its stake in Dodla Dairy, The Economic Times reported in November. “India’s dairy consumption has been experiencing robust growth, fuelled by urbanization, increasing incomes, and health consciousness among consumers,” said Vish Narain, partner at TPG Growth.

“Dodla is well-positioned to capitalize on these growth trends. It has a strong management team, an established presence in local markets, and an expanding selection of products. We look forward to working with Dodla to enhance its brand and grow its platform,” he added.

Founded in 1998 by first-generation entrepreneur Sunil Reddy of Nellore in Andhra Pradesh, Dodla Dairy procures and processes fresh milk to sell dairy products across 66 regions in south India. The company sources milk from 250,000 farmers across 7,000 villages every day of the year. It works with more than 3,000 distributors across nine states and its products are sold by more than 50,000 retail outlets across the country.

Demand for milk is expected to grow at a compound annual growth rate of 5% to 200 million tonnes in 2022 from 138 million tonnes in 2014, according to the National Dairy Development Board.

In order to tap the growing market, private equity and strategic investors have been actively investing in the Indian dairy sector over the last couple of years. TPG Growth, an active investor in the Indian consumer space, owns a controlling stake in Bengaluru-based Rhea Healthcare Pvt. Ltd, which operates a network of mother and child care centres in India under the Motherhood brand, surgical equipment maker Sutures India Pvt. Ltd and India-focused cancer treatment chain Cancer Treatment Services International.

Other investments by include Lenskart, an online eyewear retailer.

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