Ecus Capital has launched its second Chile-focused agribusiness fund, with a $60 million target and a hard cap of $68 million.
Ecus Agri Food Fund II has soft commitments from previous investors, including family offices and the $4.28 billion Chilean development bank Corporación de Fomento de la Producción de Chile (CORFO), according to Ecus managing director Nicolas Malard. He expects $27.5 million to come from limited and general partners, and the rest to come from a CORFO loan.
The firm can invest in agri sectors from meat, fruit and vegetables to inputs and animal health, mirroring the strategy for Fund I. Its remit is limited to sustainable companies with a maximum turnover of $24 million a year as part of an agreement to secure CORFO’s backing.
“For this fund they have proposed a loan that will leverage one to one the investments for LPs, and GPs, and this amount could be extended to $41 million on meeting certain sustainability and development requirements in the companies in which we are invested,” said Malard.
“For this fund we have also detected opportunities in the logistics and cold storage sector, distribution and retail,” said Malard, adding that their pipeline already includes specific businesses in seafoods, frozen food and nuts for food ingredients. “That is why we wanted to launch the fund while the first is still investing.”
Fund II is likely to hold a close at the beginning of next year, and will target majority or significant stakes in companies. The investment period will be four years and the term of the fund eight years. “We do need a bit more from LPs, but we are very confident of getting that by then as we have a very good dealflow,” said Malard.
Ecus Agri Food Fund I was launched in 2012, after the firm’s first general-sector fund, Ecus Private Equity Fund I. The agri fund is now 60 percent invested, and Ecus is in negotiationswith a gluten-free healthy foods business.
Agri Food Fund I invested in Ama Time, an organic fruit greenfield project, in a 50-50 co-investment with Comercial Greenvic, a Chilean fresh fruit packaging, cold storage and distribution company with local and international markets.
“Comercial Greenvic is the first exporter of organic fresh fruits here in Chile and Ama is now the leading Chilean manufacturer of organic fruit purees and juices,” said Malard, adding that the puree business now has a roster of clients in the US as well as Chile, and is launching a fresh fruit juice brand in Chile.
Two of the three managing partners, plus Malard, are French and he said a key part of the firm’s strategy is to add value by using European business models and technology.
“In Ama, we incorporated Italian technology and brought in French experts that assisted us with the layout of the company, choice of machinery and science that would also answer the requirements for our clients,” he said.
“We detected a lot of opportunities for the first [$30 million] fund, but they didn’t fit because they were too big,” Malard said. “Chile is a huge exporter of a lot of products, but with poor added value, so our investment thesis is to have competitive raw materials in Chile, to have markets with high demand domestically and internationally, and to bring foreign technologies and know-how to add value to this raw material.”
Ecus was formed in 2005 and has made seven investments. CORFO backed both previous funds.