Chilean fund raising $50m for permanent crops in Colombia

Sembrador says it has a commitment from IDB and expects one from the Colombian government.

A Chilean agri-focused private equity firm, Sembrador, plans to raise $20 to $50 million for permanent crop farms in rural Colombia. The group is courting the Colombian government, the Inter-American Development Bank and family offices for commitments for the fund, which is expected to close by year-end 2016, according to a Sembrador executive.

The Colombian government is in advanced discussions on an investment in the group’s Victus Fund IV, and the IDB has already committed around $1.5 million to the venture, Sembrador chief executive Jorge Karadima told Agri Investor. He expects the Colombian government to contribute roughly 20 percent of the fund’s total.

Sembrador is already looking at prospective properties in historically-underdeveloped areas in the regions surrounding Bogotá, Medellín, Cali and north-eastern Colombia with the objective of investing in four to six greenfield projects producing lemons, cocoa, coffee, avocados and pineapples among other crops.

Previous Victus funds have been focused on Chilean investments. However, Karadima said Colombia holds distinct advantages in export logistics, climate and investment costs that made it an attractive market for the group to enter.

“The land prices are pretty attractive and there is plenty of water,” said Karadima. “Weather-wise, Colombia is pretty attractive.”

Karadima said the wide range of elevations offered by the Colombian landscape provide optimal growing environments for a variety of crops.

“You can find the right climate for the right crop [in Colombia]. And for that, you play with the altitude,” he said.

Meanwhile, Colombia’s Caribbean ports give its farms relatively easy access to European markets.

“Getting a boat from the ports in Colombia to Rotterdam is faster in comparison to Chile,” he said.

Karadima said Victus Fund IV projects will look primarily to the North American and European export markets, depending on the crops produced. Gradually, though, the fund will look to expand exports to East Asia, he added.

“I think Colombia is more North America and Europe-ready. We’ll have to work on Asia,” he said. “Today, you have to focus on Asia or else you’re dead.”

Sembrador generally tells investors to expect a 4-year deployment period for its funds. However, Karadima said given the progress in developing a strategy and identifying potential investments and partners, he expects Victus Fund IV to be fully invested within three years of an expected 2016 close.

The Sembrador executive said his group has found an enthusiastic partner in the Colombian government, which he said is eager to spur investment in under-developed areas.

In addition to the Colombian government and Inter-American Development bank, Karadima says Victus IV will seek funding from family offices and high net worth individuals.

Victus’ previous three funds have all focused on permanent crop production in Chile and relied heavily on government investment. Out of a total of $70 million raised by the three funds, roughly $45 million came from the Chilean government, according to Karadima.