Sustainability-focused real assets firm Equilibrium Capital Group has completed an equity investment of an undisclosed size into Houweling’s Group, a greenhouse vegetable grower with facilities in Canada and the US.
A source told Agri Investor capital for the investment came from Equilibrium’s Controlled Environment Foods Fund, which is seeking $250 million, according to a March regulatory filing. The vehicle counts A$11.32 billion ($8.06 billion; €7.09 billion) LGIAsuper among its investors, according to the Australian pension’s website.
Founded in 1974, Houweling produces tomatoes, cucumbers and bell peppers on 200 acres of greenhouse farms in Delta, British Colombia; Camarillo, California (pictured); Mona, Utah and Loveland, Colorado.
Equilibrium principal Dave Chen declined to disclose to Agri Investor the size of the investment but said his Portland, Oregon-based firm becomes equity owner of Houweling’s greenhouse facilities, while Houweling remains under the ownership of its employees and founding family.
Chen said the deal structure is similar to the sale/leaseback used in other farmland investments and echoes an agreement in December when Equilibrium made an $11.3 million equity investment into Revol Green, which operates a 132,400-square-foot greenhouse facility in Minnesota that will also be expanded.
“The industry is now at the knee of the curve and these companies are finding that access to expansion capital – not just private equity, but expansion capital – for an asset-intensive industry, the greenhouse industry, is strategically important,” Chen said.
While the average greenhouse in the United States is about 40 acres, according to Chen, Houweling’s facility in Camarillo is already 120 acres and Equilibrium plans to double the capacity of the approximately 30-acre Utah greenhouse.
Chen said Equilibrium’s indoor agriculture strategy will include new-build greenhouse facilities, but the firm’s near-term focus has been on establishing partnerships with the market’s seasoned growers.
“Frankly, greenhouse growing is very, very hard,” Chen added.
Equilibrium is also already among the largest indoor strawberry growers in the US, Chen said. The firm has committed to expanding its strawberry-focused holdings by an additional 300 acres in the next 24 months, including through an already-closed transaction Chen declined to discuss.
“Strawberries and bananas are two incredibly important fruits,” said Chen. “Bananas are in 50 percent of all grocery baskets and strawberries are the killer fruit – killer in the volumes, inclusion in everything; every time you go in your refrigerator, there are probably some strawberries in there.”