Blackstone enters cold storage

The investment into Cloverleaf is understood to be the firm’s first since identifying cold storage as a strategic opportunity about a year ago.

Blackstone has bought a majority stake in Cloverleaf Cold Storage, a Sioux City, Iowa-headquartered warehousing and food logistics company specializing in protein.

A source familiar with the deal told Agri Investor that capital for the investment came from the Blackstone Capital Partners VII fund, which closed on $18 billion in late 2015. Financial terms were undisclosed and Blackstone representatives declined to provide more detail.

The Feiges and Kaplan families, Cloverleaf’s founding owners, will retain a stake in the company and continue in their current roles at Cloverleaf, the firm said.

Cloverleaf was founded in 1952 and operates 19 warehouses in eight states located in the Midwest and Southeastern US, offering its more than 800 customers warehousing and processing services. In addition, the company has a division called Farmers Produce that provides meat-industry specific value-added services including boxing, boning and trimming.

Blackstone managing director David Kestnbaum labelled cold storage a strategic industry prioritized for investment and said the firm hoped to continue Cloverleaf’s efforts to build a “market-leading platform within the cold storage industry.”

Value-added services

A source told Agri Investor that the investment in Cloverfield is Blackstone’s first in cold storage after about a year of investigating the sub-sector.

Blackstone is said to view the investment as drawing from its overlapping specialties in real estate and private equity, while building upon experience gained through investments in frozen food supplier Bird’s Eye Food, food distributor Performance Food Group and industrial warehousing company Logicor, among others.

“Years ago, these businesses were largely cold warehouses where you froze food. Now that is evolving into thinking about the safety of the food chain and other value-added services that can be provided to customers,” the source explained.

It is understood that Cloverfield plans to canvass its customers about which US regions it should look to expand into.

Increasing the efficiency of Cloverleaf’s provision of services will also be a key focus of Blackstone’s investment, the source said, mentioning robotics, automated storage and warehousing techniques employed in other industries as areas the firm may look at.