Deals

Farm Credit System-funded agribusiness fund makes first investment

The $155m Advantage Capital Agribusiness Partners LP has made its first investment into a cage-free chicken egg producer, Iowa Cage-Free.

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The $155 million agribusiness private equity fund mandated to Advantage Capital Partners, a Los Angeles venture capital firm, by the US Department of Agriculture and the Farm Credit System last year, has made its first investment into a chicken egg production company.

The investment into Iowa Cage-Free was closed the end of last year for an undisclosed but very small portion of the overall fund, according to Tim Hassler, principal of Advantage Capital’s St Louis branch.”We are still looking to invest more in small businesses,” Hassler told Agri Investor. “Our preferred size of investment is $13 million to $15 million in food or all other agribusiness sectors.”

The egg producer will use the funds to convert its site to a cage-free facility to fulfill a new large contract for a client.

Advantage Capital Agribusiness Partners LP was launched through the USDA’s Rural Business Investment Program as a way to help improve funding of the agriculture sector.

Nine farm credit institutions committed to the fund: AgriBank, Capital Farm Credit, CoBank, AgCountry, AgStar Financial Services, Farm Credit Services of America, Farm Credit Mid-America, United FCS and Farm Credit Bank of Texas. The amount each institutional committed remains confidential.

“Businesses in rural America face a shortage of investment capital and this fund attacks that problem by providing rural businesses with funding to grow and create new jobs in rural communities,” said Scott Murphy, chief investment officer at Advantage Capital Partners, in a February 20 press release.

Hassler said that Advantage Capital had received several hundreds of proposed investment opportunities and is currently in talks with a small percentage of these companies. “We are looking for companies with $10 million to $100 million in annual revenues,” he said. The private equity fund is restricted to invest less than 10 percent of its total size in any one investment.

Founded in 2009, Iowa Cage-Free is a six-building complex that houses 600,000 layers and produces over 5.3 million eggs annually.