Private equity fund FIMI Opportunity Funds is bringing a partner into Rivulis Irrigation (formerly the water division of John Deere). The new partner, Indian company Dhanna Engineering (DEL) is acquiring 20% of Rivulis for $34 million, while FIMI will retain the remaining 80%. The deal reflects a $170 million value for Rivulis, six months after FIMI acquired Rivulis for $60 million.
John Deere Water included Israeli company Plastro from Kibbutz Gvat and US companies T-Systems and Roberts Irrigation a collection of companies dealing in areas relating to irrigation, spraying, and drip irrigation. A lack of focus, however, caused the acquired division to lose $50 million in 2013 on $250 million in revenue. Since FIMI acquired Rivulis, the company has been on the mend, including the replacement of its management and other measures.
The Indian company investing in Rivulis is a private company owned by the Firodia family, one of the wealthiest families in India. It is the controlling shareholder in Force Motors, which is active in the auto industry. According to "Forbes" magazine, Abhay Firodia, the 70 year-old family patriarch, has a personal worth of $1.4 billion.
World's biggest irrigation market
Senior FIMI partner and Rivulis chairman Gillon Beck commented on the new partnership and its significance for Rivulis's expansion to eastern markets, saying, "We welcome Indian company DEL to a partnership in Rivulis, and we're confident that it will add a great deal of value in the efforts to penetrate the Indian market. FIMI, which acquired complete ownership of Rivulis in June 2014, has succeeded in leading the company towards profitability and growth, with significant improvement in all its operational parameters. The partnership with the Firodia family will give Rivulis an advantage in the eastern markets. This is another stage in the positive turnaround in Rivulis, and we're confident that growth will continue, and the company will consolidate its status as a global leader."
Rivulis CEO Richard Klapholz said, "The Firodia family brings with it several decades of relevant experience in India. We plan to leverage this experience to become a key player in irrigation in India. We have the ability to carry out the growth strategy we have planned. I am very glad that we have been given this rare opportunity." According to Klapholz, the investment constitutes a vote of confidence in Rivulis Irrigation.
Sudhir Mehta of the Firodia family, who was appointed a director in Rivulis, added, "Rivulis Irrigation's current footprint in India, combined with our reliable industrial experience and major presence in the market, will make possible rapid growth in the eastern markets, and we're glad to be part of this effort. We plan to aid in the company's development in India, a country with the largest irrigation market in the world."
FIMI, whose returns have been exceptional even in terms of the global private equity funds industry, specializes in acquiring operating companies and improving them. Its acquisitions are made with very little leverage, and in a large proportion of cases, with no leverage at all. As of now, the fund has acquired control of 80 companies and achieved 50 exits amounting to over $4 billion.
FIMI has invested $750 million over the past three years. Among its prominent deals are the acquisition of control in Ormat Technologies Inc. (NYSE: ORA; TASE: ORMT), Ham-Let (Israel-Canada) Ltd. (TASE: HAML), Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT), Hadera Paper Ltd. (TASE: AIP; Pink Sheets: HAIPF), and Polyram (1999) Ltd. (TASE:POLRM). The company expects to maintain an investment pace of around $250 million a year.
Published by Globes [online], Israel business news - www.globes-online.com - on October 11, 2015
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