Sao Paulo-headquartered Aqua Capital drew from its third fund to support its acquisition of Exata, a Brazilian provider of soil and plant testing services and data.
Exata is headquartered in Jatai in the state of Goias, from which it provides a network of Brazilian producers with comprehensive analysis of soil composition and nutrition. Plans call for continued expansion into the country’s Midwest, where the company says its growing network of four regional labs provide services that help facilitate the transition to regenerative agricultural practices such as precision agriculture, crop rotations and biological inputs.
The deal is the fourth from Aqua’s third fund, which had raised at least $309 million from at least 24 LPs towards its $400 million target, according to regulatory filings from May. Other deals drawing from the vehicle include its August acquisition of Colorado-headquartered ag distribution network Novus Ag and acquisition of a stake in Solubio Tecnologias Agricolas, a Brazilian company that offers “biofactories” capable of delivering biopesticides, biofungicides, inoculants and biostimulents to producers.
Last month, Aqua exited the majority of its investment into Biotrop, a Brazilian biologicals producer it helped establish in 2017, through a €532 million sale to Belgian crop protection firm Biobest and Singaporean sovereign wealth fund GIC. The deal will also be supported by an investment round worth up to €400 million that includes investors such as Tikehau Capital, M&G Investments, Unigrains, and entities close to Biobest majority owner Floridienne, a Belgian industrial group.
Tikehau announced in late September that its €120 million contribution to the Biotrop deal constituted the first investment from its private equity regenerative agriculture fund.
Aqua managing partner Sebastian Popik told Agri Investor the Biotrop sale was the result of a formal sales process that revealed a significant degree of interest in the biological inputs market on the part of strategic investors.
“It’s extremely important that ag does its share to reverse carbon emissions and other emission such as methane and there’s a huge opportunity to do so and to do so profitably,” he said. “Biologicals is perhaps the posterchild of that intersection; of really driving planetary good with a profitable aim. This investment from Tikehau adds more visibility to this opportunity that’s out there.”
Popik explained that growing farmer adoption has been among the key tailwinds supporting investor interest in the biologicals market. He explained that Brazil has provided an appropriate testing ground for new approaches to facilitating use of new in-puts, such as the on-farm infrastructure provided by Solubio, which offers leased use of modules housed within shipping containers that produce inputs on-site.
“This model suits especially large farmers because the cost of the manufacturing facility has been decentralized. Once you get past that, it’s very cost effective,” he said. “Whereas Biotrop is on the high-tech end, Solobio has really good products, but its more about low cost, high-volume product and application.”