AGR Partners, an agribusiness-focused affiliate of TIAA, has deployed capital to support the operations and growth plans of Titan Farms, a South Carolina peach production and processing company.
The investment was made through the TGAM Agribusiness Fund, a vehicle launched in 2016 with a $600 million target that had raised at least $292 million by August 2017, as per regulatory filings. The vehicle invests both equity and debt investments to support family-owned, mid-to-upstream agricultural processing businesses.
AGR chief executive Ejnar Knudsen told Agri Investor that the decision on how to structure particular investments depends largely on owners’ preference. While declining to specify the amount or structure of the Titan deal – and admitting that some many family-owned companies look to minimize equity dilution by using debt offered by AGR – he noted that the firm’s preference is for equity investments.
“We’re not like a mezzanine fund, or a sub-debt fund, that’s just out doing debt deals,” Knudsen explained. “Our goal is to come in and be a partner in the equity and add value.”
Titan had not responded to requests for comment at the time of publication.
As part of the Titan deal, AGR advisory board members Cor Broekhuijse and Doug Circle are joining the company’s board. Broekhuijse was formerly chairman and chief executive of Rabobank North America and joined AGR’s advisory board in 2013. Circle, who joined AGR’s advisory board in late 2015, previously founded Frozsun Foods and Sunrise Growers, which Paine Schwartz Partners sold to SunOpta for $450 million in 2015.
Founded in 1999, Titan is a vertically integrated grower, packer and processor of peaches and vegetables with more than 7,000 acres under management. In addition to 56 varieties of peaches grown on the 5,100 acres it has devoted to the crop, Titan also grows eggplants, broccoli and bell peppers. The company provides fresh and processed peach products to customers in North America. It also runs a 65,000 square foot processing facility.
Construction of the facility, which began in late 2015 and cost $8 million, allows Titan to process an annual 10 million pounds of peaches into puree and frozen formats. The factory is located in Ridge Spring, South Carolina and held by a distinct company called Palmetto Processing Solutions, of which Titan vice-president Lori Anne Carr also serves as president.
“We noticed a shrinking supply of western peaches in the market at the same time the demand for processed fruits and vegetables increased,” Titan president Chalmers Carr told a frozen-food industry trade publication in 2016. “We are already running the largest peach operation on the East Coast, and we see processing as a natural fit and next step.”
Knudsen said that Titan’s processing operation is an important part of AGR’s future plans for the company.
“They have the state-of-the-art processing plant, but also the packing operation, so they have additional ability to put more product through their processing operation,” he noted. “The plan is to be able to attract more growers from that region to put their products through this processing plant.”
Getting the stone rolling
Titan is also working with University of California, Davis to develop new peach varieties, Knudsen said, adding that the company would look to attract additional peach growers as well as producers of vegetables in the Southeast region to use its processing facilities. He declined to identify what vegetables AGR might target in its efforts to expand the customer base of Titan’s processing facilities.
AGR also views Titan as a platform for future expansions, Knudsen said, adding that its location in South Carolina provides a transportation advantage.
“When you have a brand new facility and you are in a geographic area that is attractive from a transportation standpoint – in getting fresh products to the Northeast, the East and the Southeast – they are well-positioned to be able to grow,” he observed. “As freight costs have become an increasing part of your cost structure, having a freight advantage, and having the ability to get to market faster and at a lower cost, is a nice advantage to have.”
Founded in 2012, AGR Partners is a Nuveen affiliate that has invested more than $400 million over the past four years, building a portfolio that includes Missouri corn mill SEMO Milling, generic and specialty egg producer Opal Foods and Icicle Seafoods, a diversified seafood company headquartered in Seattle.
Last week, AGR participated in a $75 million investment in Vintage Wine Estates, a privately owned wine company headquartered in Santa Rosa, California.