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EDR’s Moringa fund to close agroforestry deal before year-end

Asset management firm says its agroforestry fund Moringa will announce a deal before the end of the year, while expansion into Latin America could bring further agri investments.

Agroforestry fund Moringa, run by asset management group Edmond de Rothschild (EDR), expects to announce the completion of at least one of four advanced-stage deals before the end of the year. Additionally, the group’s Latin America Andina fund is expected to invest in agri service providers, according to EDR and Moringa executives.

Clément Chenost, the technical director of Moringa, says the fund has memoranda of understanding with promoters and is in the due diligence phase of four separate projects in sub-Saharan Africa and Latin America. The fund made its first investment in January of this year in Nicafrance, a producer of shade-grown coffee and premium timber. The Nicaragua-based project reflects the fund’s focus on agroforestry, a system of land use management in which crops or pastureland share space with trees or shrubs for more sustainable production.

Chenost declined to elaborate on the precise locations or products of developing projects. However, he did say that the fund looks to limit its projects to production of a handful of agricultural goods. He expressed interest in increasing the fund’s exposure to coffee and timber, listing food crops and cocoa as other products the fund would be interested in investing in.

“We are deploying slowly but surely,” said Chenost. “We are very selective. Therefore, we have 5 years of investing period and we have the time to select the best assets.”

This activity comes on the heels of the news that Edmond de Rothschild plans to increase its private equity exposure by 50 percent, from €3 billion to roughly €4.5 billion by 2018. With Moringa still in its first year, the announced investment push will not include launch of any additional agriculture-specific funds, according to Johnny El Hachem, chief executive of EDR’s private equity team. However, an anticipated fund focused on Latin America’s Andina region is likely to seek opportunities in companies that support the agri sector.

“It could be a consultancy firm, providing high value services for the timber industry. It could be an activity linked to the transformation of [the productivity] limit of a implantation; or financing in terms of cap ex or equity for any industrial producer to secure its supply by providing equity for a farmer to secure a future supply swap,” El Hachem told Agri Investor.

El Hachem said that the impact investment approach taken by Moringa and other EDR funds is primarily based on financial interests, with social and environmental impact serving as a pleasant secondary benefit.

“We’re not here to sacrifice return for the benefit of environmental and social impacts,” said El Hachem. “We strongly believe to deliver long-term return we need to consider social elements and environmental elements within any project as risk factors to be mitigated.”

“What we are seeing now is a market move,” adds Chenost. “We see more and more consumers that want healthy food that doesn’t have negative environmental impacts.”

Moringa is in the process of reaching a final close, at more than €85 million, according to Chenost. Its target was €100 million, according to PEI Research & Analytics. The fund has a deployment period of five years. Edmond de Rothschild Private Equity currently has more than €3 billion deployed across 10 investment strategies in growth capital, emerging economies and real assets.