Drip irrigation technology company Netafim Ltd. has signed a major bank financing deal worth $500 million over five years. The financing will be used to expand the company's growing marketing activities.
The lending syndicate is led by Bank Hapoalim (TASE: POLI), and includes: HSBC, Mizrahi Tefahot Bank (TASE: MZTF), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), Union Bank of Israel (TASE: UNON), and Israel Discount Bank (TASE: DSCT). The facility is comprised of a $150 million long-term loan and $350 million of revolving short term loans and lines of credit for working capital and project-related guarantees.
Netafim has 16 production facilities worldwide including three in Israel and the drip irrigation solutions company operates in 110 countries. European private equity firm Permira Fund bought a 61% stake in the company three years ago at a company value of $850 million. Kibbutz Hatzerim near Beer Sheva, which set up the company in 1965, retains a 33% stake in Netafim, which employs 4,000 people worldwide.
Netafim CEO Ran Meidan said, “The financing facility will be used for strategic growth purposes in developing markets such as India, China, Brazil and Africa, and will enable us to significantly increase our involvement in large irrigation projects. The growing and continuous demand for irrigation solutions, particularly drip irrigation solutions, offers significant growth potential for Netafim. The financing facility will support us to reach our strategic goals, develop new products, promote technological innovation, and above all, strengthen our global leadership position.”
He added, "“The agricultural market in general, and drip irrigation in particular, sits at the heart of a number of important global issues. These include increasing demand for food, due to rapid world population growth, while the planet’s water and arable land resources are finite. At the same time, the agricultural sector is the world’s main consumer of water. As a result, there is a growing demand for better and advanced irrigation solutions and greater agricultural efficiency. These trends, along with Netafim's unique global presence and innovative, high-quality products, present us with a significant growth opportunity. This financing agreement will enable us to realize such growth potential.
Netafim CFO Lauri Hanover said, "The new Facility will replace the existing arrangement. By leveraging the current financial market situation, we improved our financing terms and increased our operational flexibility."
In January, Netafim announced that it was chosen to participate in the world’s largest micro-irrigation project in the South West Indian state of Karnataka. The $60 million Ramthal (Marol) project covers nearly 30,000 acres of farmland, helping some 6,700 smallholders from 22 villages improve their productivity and livelihood, while saving 50% in water consumption.
Published by Globes [online], Israel business news - www.globes-online.com - on March 5, 2015
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