Blue Horizon plans to raise a distinct fund to support growth equity stage alternative protein companies, following its hire of an executive who previously managed PSP Investments’ European private equity unit.
New managing partner Przemek Obloj declined to disclose the target size of Zurich, Switzerland-headquartered Blue Horizon’s planned fund beyond telling Agri Investor it will be “a few times bigger” than the firm’s approximately $200 million venture capital vehicle.
“It really makes no sense to have a [growth equity] vehicle that is two or three times bigger; it needs to be more than that,” explained Obloj soon after his mid-November appointment at the impact-focused asset management firm.
“You can very quickly run the math and we are talking about a sizable vehicle for the space.”
London-based Obloj joined C$169.8 million ($130.5 million; €109.9 million) Canadian pension PSP in 2016, after holding a London-based position at Luxembourg-headquartered CVC Capital Partners, which was preceded by Munich and Warsaw-based positions at Swedish investment firm EQT Partners. Obloj was one of PSP’s first three employees in Europe, where he served as managing director and head of its European private equity unit.
Obloj said larger pension plans and sovereign wealth funds have generally been slow to respond to the emergence of alternative protein opportunities, although there are important exceptions.
“I experienced firsthand how difficult it is to truly be a pioneer,” said Obloj, whose investments with PSP focused largely on the consumer, technology and life science sectors.
“They [large pensions and SWFs] are going there – very, very aggressively, right now – but they lost the first three or four years.”
Like the early development of many industries, said Obloj, family offices managing fortunes related to food and agriculture have naturally been among key LP groups active in early-stage alternative protein companies.
“Essentially, they are going into alternative proteins as a way to give back to society, but also hedge their bets in case their business gets disrupted and alternative proteins become actually mainstream,” he added.
Anything but boring
Founded in 2016, Blue Horizon manages separate vehicles for seed and venture capital stage alternative proteins opportunities and also maintains an office in Los Angeles. The firm has raised and invested SFr 500 million ($549 million; €462 million) in 55 investments that have included high-profile upstarts such as Beyond Meat, Impossible Foods and Just, Inc alongside lesser-known companies like North Carolina-headquartered cultured breastmilk provider Biomilq and Swiss synthetic cheese provider New Roots, among others.
Blue Horizon’s expansion into alternative protein growth equity, Obloj explained, is an outgrowth of the changing relationship between private investments and public markets that increasingly demand scale to be relevant. Investments from the fund, he said, are likely to include, but not be limited to, consumer-facing companies and others in the supply chain offering potential for “meaningful and measurable impact on the planet.”
Though traditional fund structures have proven well-suited to balancing risk in supporting many of the market’s early leaders, Obloj said, later stages of development could also create discrete risk profiles requiring the addition of different forms of capital. With that long-term dynamic in mind, he said, Blue Horizon will aim to ensure the LP base of its growth equity fund contains institutions capable to commit “meaningful amounts” to support alternative protein supply chain development.
“Somebody has to pay for the scale-up but the scale-up is already de-risked, largely. Then, it could be that it no longer fits in our growth fund because it doesn’t promise those magic 20 percent plus IRRs,” he said. “Then, we will obviously look for an investor for whom it makes sense. There’s plenty of investors who will take, very happily, a 12 percent, or even lower, return, as long as its reasonably safe.”
Investor demand for exposure to alternative protein has been remarkably consistent among institutions from different regions, said Obloj, who highlighted recent institutional interest and activity as being especially strong among in Europe, China and the Middle East.
“It is about the most global investor base and deal pipeline that I have ever seen, and I have seen a bunch,” he said.
His own interest in agriculture, Obloj explained, stems from having observed gradual evolution across investing markets that saw technology morph from a single industry into a theme disrupting essentially every corner of the economy.
“If you are not looking at where disruption is coming from, then you are not doing your job,” he said. “Whereas food used to be a ‘stable but boring’ type of industry, it’s anything but nowadays.”