India’s Largest Non-Government Grain Handling Company Acquired for $126 Million

Investment holding company, Fairfax India Holding Corporation, which was established by Canadian investor Prem Watsa to focus on Indian assets, announced it has acquired a controlling 74% stake in India’s largest non-government grain handling company, National Collateral Management Services (NCMSL) for $126 million.

Founded over ten years ago, National Collateral is a leading private sector agricultural commodity storage and logistics company that has positioned itself to be able to capitalize on the significant nascent potential in India’s underdeveloped agricultural infrastructure industry. The company offers grain testing, procurement, storage, and collateral management services throughout the mid-stream agricultural value chain in the country.

Fairfax was established in late 2014 and went public in January of 2015 raising more than $1 billion in its initial public offering (IPO).

Multinational private equity firms including Carlyle, Bain Capital, and Blackstone have all reportedly bid for a minority stake in NCMSL whose clients includes Cargill Inc., and Louis Dreyfus, and whose existing shareholders include the International Finance Corp., the Indian Farmers Fertilizer Cooperative, the National Commodity & Derivatives Exchange, and multiple banks.

As India strives for greater food security under the new Modi administration, policy reformation – both fiscal and non-fiscal in nature, have given private agricultural operations the impetus to invest in expansion and business enhancement. As a result, India’s agricultural logistics sector has seen a flurry of deals as investors seek to capitalize on the under-developed and fragmented nature of the industry.

“Anything to do with storage is a very fragmented sector in India. Consolidation in bound to happen,” says Sandeep Upadhyay, head of logistics and infrastructure for Mumbai-based Centrum Capital. “There is a lot of room to grow. Normally, logistics grow at twice (the rate) of GDP growth in India.”