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Bill Gates, SPACS and direct investments – the biggest headlines from H1

The world of agricultural private market investments has had a strong start to the year, with one of biggest fund closes in the past couple of years and significant SPAC transactions.

As the second half of the year gets into its swing, we wanted to look back at who and what has made the biggest splash in the world of ag in 2021 so far.

Coming courtesy of the Land Report in January, the news that Bill and Melinda Gates had become the largest private farmland owners in the US dominated many conversations for much of the first quarter.

Bill Gates later clarified in a Reddit ‘Ask me anything’ session following the release of his book How to Avoid a Climate Disaster, that the investments were not linked to climate and that his investment group, Cascade Investments, “chose to do this.”

Based on anecdotal evidence from sources that Agri Investor has spoken to, while the Gates’s 242,000-acre portfolio reiterates that farmland is an “income producing storehouse of wealth,” few GPs sought to leverage the news in their discussions with LPs as a reason why they should also be looking at farmland.

“It’s a positive message that someone like that is investing in farmland and sees the benefits of it, but we’ve pretty much focused on the financial characteristics of farmland like the diversification, the inflation hedging and so on, and left them to discover who else is in investing in it,” a source told Agri Investor.

Elsewhere, the world of controlled environment agriculture, which encompasses those labeled as greenhouses as well as vertical farms, has had a very strong start to the year.

Indoor farm developer and operator AppHarvest raised $475 million in February in a business combination with Nasdaq-listed special purpose acquisition company Novus Capital, which took the company into the public market.

Another SPAC followed in March, this time taking vertical farmer AeroFarms public through a combination with Spring Valley Acquisition.

AeroFarms co-founder and chief executive David Rosenberg told Agri Investor the company chose to go public because it wants to take a leading role in the sector. “I thought it would be important to help set the narrative of the industry to share our story before someone else does something, and the world looks at the wrong leader in taking the tone,” Rosenberg said.

And in July, fund manager Equilibrium closed its Controlled Environment Foods Fund on $1.02 billion – one of the largest ag-focused private market vehicles to complete fundraising in the past two years.

Last, and by no means least, the wider trend of LPs reconfiguring their investment strategies in a way that allows them to do more direct investments continued uninterrupted, as Canadian pension Caisse de dépôt et placement du Québec established a unit for direct farmland and timber investments in June.

The unit plans to deploy as much as C$2 billion ($1.7 billion; €1.36 billion) within the next five years. Managing director Nicolas Leyssieux told Agri Investor: “I don’t say we will never invest in funds. This can be done when it’s justified for co-investments, or learning or pipeline, but it’s not the core of the strategy.”

With big announcements in cell-cultured meat regulations expected in H2, and Tiverton Advisors having already raised more $440 million in July for a strategy targeting the underserved ag private credit space, the second half of the year should be equally strong for the sector.