Cibus and James family office back $70m Ostara Series C

The Cibus Funds’ Alastair Cooper says generalist investors backing production of a granular phosphate product reflects wider capital pools being attracted to the entire supply chain.

The Cibus Funds and a family office connected to former Blackstone Group executive vice chairman Hamilton James were among the investors in a $70 million Series C for Canadian recycled phosphates provider Ostara.

The family office, Carica Sustainable Investments, joined existing investors Forage Capital Partners and Grosvenor Food & Agtech in the round.

The capital will support completion of a St Louis facility devoted to production of Ostara’s ‘Crystal Green’, a “plant-available” granular phosphate derived from recycled municipal and agricultural waste streams. The facility will compliment an existing plant in Florida and allow the Vancouver, British Colombia-headquartered company to supply 200,000 tons per year to farmers in the US and Canada.

Cibus head of venture capital Alastair Cooper told Agri Investor that the firm invested in Ostara about four years ago, when its investors included fellow agtech-specialists Forage and Grosvenor. Cooper said there were a few other, smaller North America based generalist investors in Ostara’s Series C, and Carica’s presence in the round reflected recent changes in ag-focused investment markets.

“The fact that they are participating is indicative of much broader and generalist interest in this space and the fact that its appeal is resonating much broader, not just for technical specialists,” he said. “Ultimately, it is a reflection that there is a broader range of opportunity sets for these companies to exit than there was four or five years ago.”

Grosvenor Food & Agtech, which previously operated as Wheatsheaf, led an $11 million round for Ostara in early 2019. Cooper said the number of water treatment facilities equipped to produce Crystal Green has since risen from 18 to 23. There has been growth in consumer demand, propelled by food security and water pollution concerns, he added.

“Governments and regulators in many states are introducing new regulations around input applications and basically getting much control around pollution of water courses,” he said. “Because it improves soil structure – and on a return-on-investment basis – actually provides returns of three to one, it’s very attractive for the farmer to use instead of phosphate fertilizers.”

Cooper said as a result of the shift in sentiment over the past five years, ag-related technology companies like Ostara now face a broader set of potential outcomes, including in public markets.

“Clearly, the public markets today are relatively closed, the SPAC market has obviously retrenched and the IPO market has retrenched for macro reasons, but that will come back,” he added. “The public markets give an opportunity set of scale to these types of companies. Everybody gets this. Retail wants to be involved. The mutual funds that can only trade in public markets, they are interested. We are seeing it resonate so much wider.”

The Cibus Funds aim to raise more than $700 million for the second iteration of a set of paired growth equity and agtech-focused investment vehicles. The funds secured $100 million from the Los Angeles County Employees Retirement Association in April and have supported investments into Withcott Seedlings, which provides vegetable seedlings to field and greenhouse growers in Eastern Australia.

Cooper said the recent transition in capital flows into private food and ag in private markets has been dramatic.

“Right from agritech and food tech, through to growth equity buyout, through to large-scale real asset operating real asset strategies,” Cooper said. “It’s attracting wide pools of capital.”

New York-headquartered Carica did not reply to messages seeking further detail. It is the sustainable investment arm of the family office associated with Hamilton James, former executive vice chairman of the Blackstone Group. In addition to food and ag and water and waste processing, its $200 million Fund I targets total investments ranging up to $30 million in circular economy, renewable energy production and advanced building materials.