Jain Irrigation to merge international business with Rivulis to create a global irrigation and climate leader

Jain Irrigation to merge international business with Rivulis to create a global irrigation and climate leader
The deal will reduce Jain Irrigation’s consolidated debt by around 45 per cent i.e. by INR 2,664 crores on a consolidated level while allowing it to retain a significant minority stake in the merged company

Jain Irrigation Systems, India and Temasek-owned Rivulis, Singapore have announced that Jain International Trading B.V. (a wholly-owned subsidiary of Jain Irrigation) and Rivulis have entered into definitive transaction agreements. The International Irrigation Business (IIB) of Jain Irrigation will now be merged with Rivulis and create a global irrigation and climate leader – being 2nd largest in the world with US$ 750 million in revenues. By virtue of this cash and stock transaction, the following is being achieved.

  • Cash proceeds will be utilised for the reduction of consolidated debt of Jain Irrigation by 45 per cent which includes all the restructured overseas bonds to the tune of USD 225 million and complete debt of overseas operating companies comprising of IIB.
  • Jain International Business will continue to hold a stake of 22 per cent in the merged entity with Temasek holding the 78 per cent stake.
  • Jain Irrigation will also get to release its corporate guarantee given by Jain Irrigation, India of INR 2,275 crore to bondholders and IIB lenders.
  • Jain Irrigation will have a long-term supply agreement with the merged entity, which would drive revenues and profits.
    The merged entity will continue to use and promote prominent Jain brands in markets where they have significant presence and value.
  • In terms of governance, Jain Irrigation will have representative directors and observers on the board of the company and will be able to help its growth through its significant expertise in micro-irrigation.
  • Jain Irrigation retains potential future value generation from the creation of this large global irrigation leader.

Going forward, Jain Irrigation will focus on further improving the India business to drive higher growth and margin in one of the fastest-growing irrigation markets in the world and eventually aim to reduce debt on the standalone Indian business balance sheet as well – as agreed with the lenders in the recent restructuring.

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Speaking on the development, Anil Jain, Managing Director, Jain Irrigation said, “We are very happy to enter this alliance with Temasek a globally recognised investment company with values that align with ours on creating sustainable and impactful hi-tech agribusinesses. We anticipate that the merger with Rivulis will create a world-leading player ideally placed to serve its global customer base thanks to its geographic footprint, breadth of offerings as well as technological depth and expertise in micro-irrigation. This will enable us all to address climate change and food security challenges with sustainable solutions and implement the critical knowledge transfer for water efficiency and productivity for growers. We look forward to this long-term relationship to create a meaningful positive impact in the agri and food ecosystem.”

“At the same time, we also look forward to jointly explore collaboration opportunities with Temasek in the future of food and agriculture, including areas relating to ESG, hi-tech agricultural inputs, technology innovation, as well as solutions to benefit smallholder farmers,” he added.

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Highlighting the partnership, Richard Klapholz, CEO, Rivulis said, “We are thrilled to have both companies join forces to better serve the growing needs of irrigation markets around the world. While benefiting from significant operational economies of scale and a dedicated, diverse employee base, we will ensure that all commitments to our grower community and to our combined business partners are maintained and further strengthened. Our goal is to ensure that all our customers will continue to be successful and benefit from a broader offering, leading industry brands, expanded manufacturing base and the support of leading irrigation services businesses.”

“Rivulis, before the merger, represented the combination of four companies, and through this merger, several more companies from Jain Irrigation’s portfolio will be added, cementing our role as a market consolidator and leader across the globe and creating a single company with a much stronger financial foundation. Together with all Rivulis employees, I look forward to working closely with the Jain USA, AVI, IDC and global NaanDanJain teams. I am certain that we will all benefit from the vast experience and continued commitment and dedication of the combined teams,” Klapholz added.

The company reflects the vision of both Rivulis and Jain Irrigation in building a long-lasting, purpose-led company that will spearhead the transformation of agricultural irrigation. The company will lead the mass adoption of modern irrigation solutions and digital farming by growers and business partners globally through its focus on accessibility, innovation, and sustainability.

4 key drivers of the joint venture

Driven by Customers

The company will have unparalleled market coverage with 25 factories and 3,300 employees across six continents and 35 countries. The company will continue to fully support the brands that growers and business partners have come to rely upon season after season: Rivulis, Jain, NaanDanJain and Eurodrip.

Driven by Innovation

Growers and business partners will benefit from an extensive product and solution offering, consisting of trusted industry brands such as D5000 PC, Amnon, T-Tape, Chapin, Ro- Drip, Top, Excel, Compact, 5035 and Mamkad. Eight decades of R&D and product engineering will be combined into a perpetual innovation engine, addressing the current and future needs of growers worldwide.

Driven by Digital

With digital farming services such as Jain Logic, Manna and ReelView, the company is poised to become a robust agritech solution provider with the most extensive market coverage. Through its wide-ranging digital farming offering, growers will be able to finetune their irrigation operations in real-time, while increasing yields and reducing agri-inputs resulting in improved livelihoods and safeguarding of their land.

Driven by Sustainability

Beyond the known micro-irrigation benefits of water conservation and soil protection, the company will continue its purpose-led ESG journey. Following the completion of the transaction, the company will commit to tangible carbon emission targets and launch its global programme to help growers and business partners reduce their carbon emissions and increase their carbon sequestration. The company aims not only to make micro-irrigation accessible to growers and to feed the planet but also to enable a more sustainable and climate-resilient future for all.

The company will be dual headquartered in Singapore and Israel and will continue to be named Rivulis. For the purposes of corporate branding, the company will be represented as ‘Rivulis (In alliance with Jain International). Richard Klapholz, the current Rivulis CEO, will continue to lead the company. Top senior associates from the IIB are expected to continue in leadership roles across the company.

The transaction is subject to required regulatory approvals and other customary closing conditions and is expected to be completed by early 2023. Goldman Sachs acted as a financial advisor, Baker McKenzie acted as a legal advisor and PWC acted as tax and diligence advisor to JITBV for the transaction.

(All information is provided by the parties in the joint venture. Agriculture Post doesn’t assume any responsibility or liability for the same.)

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