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Oct 24, 2017
ECONOMYNEXT – Sri Lanka’s ban on glyphosate could drive demand for high quality specialty fertilisers of the type sold by Unipower (Private) Limited (UPL), bought by agribusiness firm CIC Holdings PLC in a deal arranged by NDB Investment Bank Limited.
“Specialty fertilisers offered by UPL help farmers increase crop yields, improve product quality and reduce the environmental impact of agricultural practices,” said NDB Investment Bank Limited (NDBIB).
“Properties such as higher water solubility, better soil absorption, and slow release of nutrients lead to higher levels of productivity and improved returns on investment.”
CIC Holdings (CIC) acquired a 70% stake of UPL, a family-owned firm which focuses on specialty agricultural fertilisers, complementing CIC’s portfolio of products and services in the agri business sector.
The transaction brought globally known brands in specialty agri inputs such as Yara, Everris, Grow More and Ginegar under the CIC umbrella, NDBIB, which acted as financial advisor to the deal, said in a statement.
It also strengthened UPL to “spearhead a new phase of growth supported by the strong distribution strengths of CIC,” NDBIB, the fee based investment banking subsidiary of NDB Capital Holdings, said.
The recent ban on glyphosate and negative publicity on the environmental impact of agrochemicals are expected to drive demand for high quality specialty fertilisers and boost UPL’s vision of diversifying away from relying solely on traditional commoditised fertiliser, NDBIB said.
UPL was established in 1988 by Jayantha Rajapakse who has pioneered the introduction of specialty agricultural inputs to Sri Lanka and will also continue to function as UPL’s Executive Chairman, the statement said.
“This transaction demonstrates how family owned companies could partner with larger institutions and utilise their strengths to achieve a higher growth trajectory on mutually beneficial terms.” Said Darshan Perera, chief executive of NDBIB.
Rajapakse said his firm as the pioneers of introducing specialty fertilisers to Sri Lanka has acquired partnerships with specialty agri input suppliers in the past 30 years.
“Completion of this transaction with CIC marks a significant milestone for Unipower as we are better able to extend our reach for higher growth potential.”
Vice President and Head - Corporate Advisory at NDBIB, Nilendra Weerasinghe said the Unipower transaction was special for two reasons.
“Firstly, the shareholders weren’t looking for just an exit; they were looking for a growth platform. So, strategic fit was very important.
“Secondly, it was likely to be a trade sale; managing confidentiality was paramount. We are confident we delivered on both counts.”
NDBIB said it executed the transaction in a three-staged process carefully screening potential partners for strategic fit with the founder’s vision for UPL and its business operations.
Ensuring confidentiality throughout the process was very important especially given the need to manage concerns of a trade sale whilst also providing adequate information to enable satisfactory due diligence.
“The transaction indicates the level of heightened M&A activity in the country and the pivotal role played by NDBIB as the leading and preferred advisor for M&A transactions,” the statement said.
The Unipower transaction comes on the back of Dialog Axiata’s acquisition of Colombo Trust Finance marking the second successful M&A carried out by NDBIB within a space of just over a mont