Arable continues irrigation roll-up

Addition of US Irrigation to the WSIB-backed firm’s Laurel Agriculture + Water Solutions platform could be designed to bring in recurring rental revenue, says source.

Arable Capital Partners, a Washington State Investment Board-backed investment firm focused on food and agriculture on the US West Coast, has acquired Bakersfield, California-headquartered irrigation services provider US Irrigation for an undisclosed sum.

The deal is the latest addition to Arable’s Laurel Agriculture + Water Solutions platform, created in late December to house its three previous acquisitions in the sector: micro-irrigation focused Hydratec; drip and sprinkler irrigation systems provider Lodi Pump & Irrigation; and Universal Irrigation and Supply, which services a customer base made up largely of permanent crop growers in California.

“Irrigation rental services were an element we knew we needed to have within Laurel Ag, and we are excited to provide that throughout Laurel Ag and for our customers,” said Arable managing director Derek Yurosek.

“This new organization is filled with the top leaders of this industry and we are honored to bring what we have at US Irrigation to the table,” said US Irrigation founder Jon Tkac.

US Irrigation was founded in 1994 and provides customers in California and Arizona with irrigation design and rental services.

Arable, which maintains offices in Bellevue, Washington and Bakersfield, California, was founded in 2016 by former HarvestWest Investments managing director Greg Richards and Derek Yurosek, who was previously head of agricultural operations for Cottonwood Ag Management, the agriculture asset management team associated with Bill and Melinda Gates’ private holding company.

In mid-2017, Arable secured a $300 million investment from the Washington State Investment Board supporting a strategy focused on hold periods of 15 years or longer on majority and minority investments into operating businesses including logistics, storage, inputs and other sub-sectors on the US West Coast.

Based on the series of acquisitions Arable has already completed, a source familiar with the water investing market told Agri Investor that it appears the firm has focused first on securing market share. The source added that a few firms active in the water sector have aimed to secure recurring revenue through the rental of irrigation equipment, such as the rentals apparently offered by US Irrigation.

Unless such technology exists within companies that have already been acquired, the source added, Arable will likely look to add technology designed to connect its customers’ various irrigation hardware through a single precision agriculture offering.

“Everybody has to look over their shoulder or figure out how to do it themselves, when it comes to technology, and it’s easier done with a bigger balance sheet,” the source said. “Roll-up and making things bigger to ensure you can partake in the technology boom and precision ag is required to gain market share.”