Mandala buys India's EFRAC for $10m
Mandala Capital, a South-Asia focused PE firm that invests in the agricultural sector, has paid $10 million for a 51% stake in Indian testing laboratory EFRAC.
EFRAC will use about 60% of the capital to build a new pharmaceutical testing line at its facility in Kolkata, Mandala founder Uday Garg told The Economic Times. The remainder will go towards buying out angel investors who committed $5 million in 2014 to set up the company's original testing lab.
As part of the investment, Mandala has agreed to invest another $10 million in three years if the new facility reaches 100% capacity utilization and annual turnover of $40 million. The new line is expected to enter operation in the next 18 months.
EFRAC is one of the largest integrated testing and research labs in the world. It mainly tests products for the food and agriculture sector, and recently added pharmaceutical and environmental testing capacity as well. It attracted national attention in India last year, when its lab cleared Nestle's popular Maggi instant noodle product of lead contamination.
The company currently employs 94 scientists; it plans to grow this team to 150 following the acquisition. As it expands its pharmaceutical testing line, it plans to add the capability to test medicines to US Food & Drug Administration standards so that it can test products intended for the US market.
Mandala claims to have invested over INR120 billion ($1.8 billion) in Indian agribusiness since its founding in 2008. Its investments in recent years include a 2014 commitment of INR1.1 billion to agriculture-focused non-banking financial company Sustainable Agro-commercial Finance and a INR1.5 billion investment in the cold chain unit of distribution and supply chain solutions provider Gati last year.
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