Netafim Agricultural Financing Agency Private Ltd (NAFA), an agri-focused non-banking finance company and subsidiary of Netafim Singapore, has raised $40 million via external commercial borrowing (ECB) from the Phoenix Group and Cogito Capital, both Israel-based investors.

The NBFC recently also raised $9.4 million of Tier I Capital from Netafim Singapore and offering exit to the initial equity partners, Atmaram Properties & Granite Hill Fund, as they had reached their investment horizon, as per its statement.

Business expansion

The ECB funds will be utilised for business expansion, enhanced offerings, and to expand horizons in the agri-rural domain, it added

NAFA observed that the ECB fund-raise will improve its margins as it intends to service the high-cost old debt and bring down the overall cost of funds.

This is the maiden investment for both Phoenix Group and Cogito Capital in India and NAFA, through acquiring stake in Netafim Singapore, the statement said.

Agriculture needs holistic solutions

Since acquiring an NBFC licence from the RBI in 2013, NAFA has established its presence across Maharashtra, Madhya Pradesh, Chhattisgarh, Gujarat, Tamil Nadu, Karnataka and Andhra Pradesh.

According to NAFA, it has disbursed total loans worth over ₹1,000 crore to more than 10,000 customers as of date. Among these, more than 60 per cent of the farmers are small farmers and marginal farmers.

The company said it will expand its network and diversify to allied activities for customers’ long-term credit needs.

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 modernisation.

“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.”

Prabhat Chaturvedi, CEO, NAFA, observed that there is a need for diversified credit schemes in India, along with adequate handholding, to provide financial guidance to farmers on investing in agriculture and allied activities.

“With this investment, NAFA will further enhance its credit lending portfolio and expand horizons within the agri-rural domain beyond micro-irrigation…The said capital would help us strengthen our market position and reach the communities in a much broader way,” said Chaturvedi.