Deal focus: Proterra milks India’s dairy industry

Dairy consumption is taking off among India’s growing middle class, and Proterra Investment Partners stands to harvest the benefits. The firm, created in 2011 as an investment unit of agribusiness giant Cargill and independent since 2015, recognized early on that Asian economic trends meant the region’s appetite for milk would only rise.

“Dairy processing and dairy farming have been front and center as an investment thesis over the six years of our existence, and if there’s any industry in India that’s benefiting from urbanization and higher incomes it’s the dairy industry,” says Deepak Malik, a managing director at Proterra who heads its food production and distribution investments in India, Southeast Asia and Australia.

This early confidence looks set to pay off, with TPG Capital agreeing to buy Proterra’s entire holding in Dodla Dairy. The GP will receive $50 million for a stake purchased in 2012 for INR1.1 billion (then $20 million).

Over the past four years southeast India-based Dodla has boosted its production from 500,000 liters of milk per day to more than 900,000, sourced through a network of 250,000 smallholder farmers, and built three additional processing units to handle the new capacity.

This farmer network is considered essential to the company’s success, as it can hold producers directly responsible for the quality of their products in a way that other dairies, which rely on agents to collect their milk, cannot. But even more important than accountability is the support Dodla provides through its farmer engagement program, which helps farmers access affordable feed and veterinary treatment, along with bank financing for improving facilities.

“When you get into new areas you have to do all the right things, because competition to source milk from the farmers is pretty intense,” says Malik. “Dodla’s growth over the last four years and the fact that it’s been able to build such a robust supply chain is because they’ve actually gone out and created the infrastructure of collection and direct dealing with farmers.”

To help Dodla gain first-hand experience and insights that it could then pass to its farmers, Proterra helped the company found its own dairy farm. The facility is dedicated to research rather than commercial production, but it has helped the company build credibility with milk producers who are then more willing to try the practices or products it recommends.

Proterra has also been pivotal in Dodla’s international expansion, which began in 2014 with the acquisition of Uganda’s Hillside Dairy and Agriculture. “Our focus only on food and food processing, and a very strong focus on animal protein, has helped establish for us an ecosystem of very strong domain experts ranging from farming and processing to value-added products,” Malik explains. “So I think the ecosystem created by being a very niche fund comes in very handy, because people like that focus and the ecosystem that you bring.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Trade sale
• Consumer
• India
• Proterra Investment Partners
• Exit
• TPG Capital