ADM Capital has acquired a controlling stake in Innoliva, one of Europe’s largest extra virgin olive oil producers, via its debut agribusiness fund, dubbed Cibus.
The deal is the second closed by the vehicle after it completed an investment in New Jersey-based vertical farming business AeroFarms last month. ADM declined to disclose transaction price, though sources familiar with the transaction said the investment valued Innoliva at more than $130 million.
Rob Appleby, founder and CIO at ADM, told Agri Investor that the deal had been brought about by the firm’s interest in permanent crops, owing to growing demand for “wellness products and food groups of high value,” especially in highly populated countries like China, India and sub-Saharan African nations.
Founded in Spain in 2006, the company bills itself as one of the pioneers of super high-density olive production, a relatively new growing method designed to generate higher yields at a lower cost. The company owns 5,000 hectares of olive groves in Spain and Portugal, from which it produces up to 9,000 tons of extra virgin olive oil a year.
Appleby said buying such a large tract of groves was something of a coup “in a world where people are quite actively trying to buy land endowed with permanent crops.” This asset-backing made the company an attractive target, he noted, as did its capacity to generate solid cashflows. He said Innoliva was on track to grow fast enough to become the largest extra-virgin olive oil producer in the world.
The firm is currently raising Cibus with a $500 million target and hard-cap, which Agri Investor understands ADM is hoping to reach in Q2 next year. The manager expects to be sealing a second close on the fund by early 2018, after hitting a $101 million first close in May. The fund has already deployed more than 50 percent of the money collected so far, Appleby said.
He added Cibus has received strong interest from investors in Australia, the Middle East, Europe and the US. In addition, he said, the fund has been “onboarded” by a large US bank’s retail platform as part of its sustainability program; it is now being rolled out to the lender’s high-net-worth clients.
The Innoliva deal is part of Cibus’s primary mandate, which sits alongside its early-stage allocation. Set to account for 90 percent of the portfolio, the strategy covers mid-market companies with an EBITDA greater than $3 million that ADM intends to hold for between four and six years, with an internal rate of return target of between 20-25 percent.
Appleby said that the firm’s three cornerstone LPs were co-investors in Innoliva alongside the firm. He noted the firm was expecting to announce Cibus’ third deal “imminently.”