Jain Irrigation Systems Ltd. completes equity raise of INR 2,896 Mn

Jain Irrigation Systems Ltd., the largest company in micro-irrigation systems (MIS) in India and the second largest globally announces completion of investment of Rs. 2,896 Mn by funds/entities managed by Mandala Capital Ltd. ('Mandala Capital') into the company.

Completion of this fund raising at JISL is part of the planned total equity raise of ~USD120 Mn, including the proposed investment by Mandala Capital in Jain Farm Fresh Foods Limited ('JFFFL'), a wholly owned subsidiary of JISL under which its global food business is being organized. This investment in JFFFL of ~USD 60 Mn is also expected to be completed to be soon.

This capital raising is part of earlier spelt-out strategy focusing on reducing overall debt levels, strengthening the balance sheet, reducing interest cost and generating free cash flows.

Transaction Summary

A committee of the Board of Directors of the Company had met for preferential issue of Compulsorily Convertible Debentures ('CCDs') with a 5% annual coupon to Mandala Capital for a total subscription amount of Rs. 2,896 Mn

- The CCDs will be converted into ordinary equity shares of JISL within 18 months at Rs. 80 per share

- JISL will use the funds for the purpose of repayment of borrowings of JISL and for the consummation of the transactions contemplated under the agreement and related transaction documents.

The investment announced is in addition to the preferential issue and allotment of 14.1 Mn equity warrants of Rs. 80 each, issued on 24.02.2016, to the promoters.

JISL continues to drive presence in its integrated agri-solutions business aimed at enhancing livelihoods of small farmers. This transaction underlines the commitment towards a sustainable future for the world, through efficient and optimal usage of natural resources with the backing of a supportive policy framework to encourage implementation of micro-irrigation systems and modern agro practices across the country. The Company's pioneering vision and established track record in the field will continue to translate the vast agri-opportunity available into value for the farming community at large.

Commenting on the development, Mr. Anil Jain, Managing Director and CEO of Jain Irrigation Systems Ltd. said, "We are happy to announce completion of the investment in JISL by Mandala. This investment comes at a significant premium to the current market price which signifies continued investor interest in the company and reinforces the strength of Jain Irrigation's business model.

This equity investment will help us further deleverage and strengthen our balance sheet, generate substantial reduction in the annual interest cost and improve our operational liquidity. This, in turn, will enable us to enhance our growth trajectory and maintain our leadership position across the markets we serve. The transaction underlines the faith our stakeholders have in us and our commitment to them, as the Company moves from strength to strength.

We are pleased to welcome Mandala Capital into JISL as one of the key stakeholders.

The micro-irrigation business is well-positioned to deliver enhanced performance on the back of the superior product/solutions profile of JISL, our financing ecosystem in the form of SAFL, the impetus received from the Union Budget and the largely untapped opportunity for putting large tracts of arable land to more productive use by way of highly-efficient micro-irrigation systems.

The continuing faith shown in JISL's business model by investors such as Mandala Capital encourages us to further our commitment towards a sustainable future for the Company and the country at large."

Shares of JAIN IRRIGATION SYSTEMS LTD. was last trading in BSE at Rs.56.05 as compared to the previous close of Rs. 57.9. The total number of shares traded during the day was 616171 in over 2274 trades.

The stock hit an intraday high of Rs. 58.75 and intraday low of 55.5. The net turnover during the day was Rs. 35070059.

Source : Equity Bulls

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