Eight years after acquiring full ownership of Israeli irrigation solutions company NaanDanJain, based at Kibbutz Naan, Indian's Jain is trying to sell all or part of the company through the JP Morgan investment bank, sources inform "Globes." NaanDanJain's enterprise value is $250 million, but it is believed that the company has heavy debts as a result of its investment in recent years in acquiring distributors and companies around the world. The option of splitting NainDanJain and selling half of its activities is under consideration. No response was available from the company.
The Indian company currently holds all of the shares in NaanDanJain, which it acquired in two stages. In the second of these, Jain paid $35 million for 50% of the company at a company valuation of $70 million, after paying a lower price for the first 50%. When the deal was completed, it was reported that NaanDanJain's manufacturing operations would remain at the company's plant on Kibbutz Naan near Rehovot, where irrigation components for agriculture, such as drip irrigation systems and sprinklers, are produced, until at least 2020.
NaanDanJain, managed by CEO Sudhakar Maddila, is an international company that produces and distributes irrigation solutions in over 120 countries. The company's products include integral drip irrigation pipes, agricultural sprinklers, climate monitoring products, and gardening products. It is believed that the company's annual revenue turnover has been $300 million in recent years, with a $20-25 million EBITDA, while its net profit has been negligible, probably because of financing expenses resulting from its debt.
Israeli water companies prospering
Israel has produced quite a few leading global irrigation companies, most of which were developed on kibbutzim: Netafim, NaanDanJain, Rivulis Irrigation, Bermad Water Control Solutions, and Amiad Water Systems. The prosperity of these companies' business and their high value is shown by a number of recently reported measures and deals.
Six months ago, "Globes" reported a deal in which Kibbutz Mishmar HaEmek was expected to acquire a quarter of the shares in Bermad, a private company from Kibbutz Evron and Kibbutz Saar at an estimated company valuation of NIS 450 million. Bermad produces hydraulic control valves for water transportation systems. The solutions offered by Bermad, which include advanced flow control technology, are considered leaders in the field.
A few months later, it was reported that FIMI Opportunity Funds, led by Ishay Davidi, was enlarging its holding in Amiad, thereby becoming the new controlling shareholder in the company, which was controlled until then by Kibbutz Amiad. Following an agreement reached by FIMI and Kibbutz Amiad, FIMI's stake in Amiad will increase from 18% to 46%, following an investment totaling $36 million. Amiad develops, produces, and sells water filtration systems designed for industrial, municipal, irrigation, oil and gas, and home use.
At the same time, FIMI hired investment bank Goldman Sachs to manage the sale of drip irrigation manufacturer Rioolis (formerly John Deere Water), controlled by FIMI, for $500-550 million. Rioolis, which has a $400 million revenue turnover, is the world's second largest drip irrigation company after Netafim.
Two years earlier, in 2017, control of Netafim, the world's largest manufacturer of drip irrigation products, was sold to Mexican company Mexichem. The Mexican company acquired 80% of Netafim's shares for $1.5 billion from foreign fund Permira, which acquired control of Netafim in 2011; Kibbutz Hatzerim (which continues to hold a 20% stake); and Kibbutz Magal.
Published by Globes, Israel business news - en.globes.co.il - on January 8, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020