India’s LT Foods has entered a supply agreement with Saudi Arabia’s state agricultural fund Salic, with shares changing hands between the two parties.

Salic, or the Saudi Agricultural and Livestock Investment Company, will purchase a 7.89% direct stake in LT Foods and a further 1.33% from the Indian firm’s owners. The total 9.22% transaction amounts to SAR208m (US$55.4m).

LT Foods, a rice and grains supplier based in Gurugram, will use the funds to repurchase a 29.5% interest in its subsidiary business Daawat Foods , a stake Salic acquired in 2020. That transaction, conducted through Salic’s United Farmers Investment Company subsidiary, is valued at INR1.76bn (US$21.7m).

Post the first agreement, LT Foods’ owners will hold 51% of the business with 39.78% in the hands of public shareholders. In the second, LT Foods becomes the full owner of all of Daawat Foods’ shares.

LT Foods said the supply and co-operation agreement with Salic, owned by the Kingdom’s Public Investment Fund, will “accelerate” the Indian firm’s “organic and inorganic expansion plans across business segments [and] give a boost to its future growth plans, specifically in the Middle East and Saudi Arabia”.

Vijay Kumar Arora, LT Foods’ chairman, said: “Our partnership with Salic is strategic in nature and goes beyond financial investment. We have developed a deep understanding of the needs of consumers in the Middle East related to food products and it will open doors for LT Foods to further strengthen its presence in this segment.”

As well as basmati rice supplier Daawat, LT Foods owns the Royal and Heritage rice brands, Ecolife rice and pulses, the Devaaya bread flour line and Kiri Kiri Japanese snacks. LT Foods generated INR54.5bn in revenue in its most recent fiscal year. It has operations in the US and Europe.

For its part, Salic will “secure larger quantities of specialty basmati rice” for Saudi Arabia.

Salic CEO Sulaiman AlRumaih added: “The extension of our partnership with LT Foods is in-line with Salic’s strategy to contribute to the food security objectives,” adding its “investment in Daawat Foods gave us an understanding of the management style of LT Foods, their market and business understanding.”