First look
Bunge acquires Viterra in $8.2bn deal
There’s only one place to start this morning and that’s the mega-merger between Bunge and Viterra, which sees Bunge swallow up the former Glencore business in an $8.2 billion deal to become a truly global force in the grains and oilseeds sector.
The stock and cash transaction (approximately 75 percent Bunge stock and 25 percent cash) also has a stock repurchase plan built into it. Within 18 months of the transaction close, which is expected to occur in mid-2024, Bunge will repurchase $2 billion of its own stock.
“Viterra shareholders would own 30 percent of the combined company on a fully diluted basis upon the close of the transaction and approximately 33 percent after completion of the repurchase plan,” said a statement from Bunge.
Viterra’s shareholders: Viterra’s three shareholders are Glencore, which has a 50 percent stake in the company, and Canadian pension plans CPP Investments (40 percent) and British Columbia Investment Management Corporation (10 percent).
Glencore will receive approximately $3.1 billion in Bunge stock and $1 billion in cash for its 50 percent stake, resulting in Glencore then holding a 15 percent equity position in the combined business.
The stock value of CPP’s compensation was not disclosed but the pension did reveal it will receive $800 million in cash upon close of the transaction. CPP will receive an approximate 12 percent equity position in the combined company.
The financial details of BCI’s stock and cash package were not disclosed.
What happens next? The 12-months lead time being estimated for regulatory approval is a sensible timeframe given the size of the deal and how it will impact control of global trade flows in grains and oilseeds.
“Antitrust regulators will never be able to affect the origination of grains – you just can’t do that,” a market source told Field Notes.
“So what’s probably going to happen is there’s going to be some shedding of infrastructure assets. We’re personally getting ready to see if we can make a play in buying some of those assets because these are huge assets. I think they’re going to need something like 14 antitrust approvals, so we’ll see how this plays out.”
Our source adds that another area to keep an eye on will be the reaction of the other members of the ABCDs, namely Archer Daniels Midland, Cargill and Louis Dreyfus company, with the Bunge deal potentially forcing them to make their own M&A plays to keep pace with the competition.
“Everyone always says the big four are the ABCDs, but let’s be real – Cargill was always in a league of its own and then you had the other three behind them,” said the source.
“The guys who are probably the most nervous about all this is ADM because now they suddenly have a huge competitor in grains and oil seeds, and in some of the areas where they were pretty strong.”
Louis Dreyfus Company completed the sale of an indirect 45 percent equity stake in the business to United Arab Emirates holding company ADQ in September 2021.
The deal shored up LDC’s capital position while also securing a supply agreement for the import-reliant Gulf state.
They said it
“It’s really pretty clear the food system is the next phase of sustainable investment for [institutional investors]. It really is where that ESG puck is going.”
PGIM vice-president Shehriyar Antia tells Agri Investor the experience of investing in renewable energy could be replicated by sustainable agriculture.
Carbon
Saudi PIF’s carbon platform auctions 2.2m credits
Saudi Arabia’s Regional Voluntary Carbon Market Company, a marketer of carbon credits, has sold more than 2.2 million credits in an auction held in Kenya.
The credits were acquired for $6.26 each by 16 Middle Eastern and international companies, which included the likes of Aramco, Saudi Electricity Company and NEOM subsidiary ENOWA.
Saudi’s carbon marketer: Regional Voluntary Carbon Market Company was established by the Saudi Arabian Public Investment Fund and Saudi Tadawul Group, a trading, clearing and settlement services business, to support the development of a voluntary carbon market in the MENA region.
The company sold 1.4 million credits in a similar auction held in October 2022 and intends to launch a full-time exchange in 2024.
The credits sold at the Kenya auction were derived from 18 projects focused on CO2 avoidance and removal, such as clean cookstoves and renewable energy projects. The majority of the credits originated from countries across the Middle East, North Africa and Sub-Saharan Africa, including Kenya, Uganda, Burundi, Rwanda, Morocco, Egypt and South Africa.
Biodiversity
The EU’s Nature Restoration Law, a central plank of the bloc’s biodiversity restoration and preservation strategy, survived a June 15 vote on whether or not it should be rejected.
Voting took place at the European Parliament’s 88 member Committee on Environment, Public Health and Food Safety (ENVI), which voted 44 in favor and 44 against – the proposal to dismiss was rejected as a result.
The result was a blow to the European People’s Party, which had heavily campaigned against the law and was influential in its rejection by the Agriculture and Rural Development Committee and the Fisheries Committee, which held their votes on May 23 and 24, respectively.
The Nature Restoration Law proposes to have restoration measures in place on at least 20 percent of the EU’s land, river and sea areas by 2030 and repair all ecosystems in need of restoration by 2050. The targets would be legally binding for all member states.
After the law survived the initial vote at the ENVI committee, voting then turned to a long list of amendments that had been tabled since the law was introduced in June 2022.
The committee ran out of time to vote on all of the amendments and will reconvene on June 27 to complete the voting process.
Deals
Partners Group lays planks for bioenergy platform
Partners Group’s $21 billion infrastructure unit led the firm’s acquisition of 35 biogas plants and 10 biomethane facilities as part of its plans to build a new bioenergy platform.
“We have built a strong conviction in the growth potential of biomethane as an alternative fuel and in capturing and commercializing carbon dioxide,” Kevin Gilhawley, a Partners Groups investment leader, said in a statement.
Financial details were undisclosed for the New York-headquartered firm’s deal for the 60MW portfolio purchased from Energiedenker Group, a German energy services company.
Gilhawley highlighted Germany as a market offering attractive bioenergy opportunities, given that few of its existing plants use alternative feedstocks, which is an area in which it wants to innovative as part of its growth plans.
Pressure to reduce food waste has helped increase interest in a bioenergy market set for a boost from a €37 billion EU strategy calling aiming to increase biomethane production from about three billion cubic meters last year to 35 billion by 2030.
Read the full story here.
Wollstone looks to tap Ferrero’s Project Hazelnut
Geneva-headquartered Wollstone Capital launched an agricultural asset platform seeking to build out a 1,500ha portfolio of hazelnut plantations in Italy.
The platform, Planta Terra, has been supported with capital drawn largely from high-net-worth and family office investors and has acquired a 70ha hazelnut property in Italy and has made an offer for a larger 220ha asset. The firm hopes to deliver IRRs in the 20 percent range.
Wollstone director Nikhil Chawla told Agri Investor the firm already has an offtake agreement in place with the Ferrero Hazelnut Company, producer of hazelnut-derived Nutella and Ferrero Roche, which has committed to taking the majority of the company’s produce.
He explained that while the Ferrero’s “Project Hazelnut” initiative to encourage production within Italy includes technical support, most important is Ferrero’s long-term agreements to take a majority of produce from properties developed by investors.
“It’s a formula-based pricing model, which is quite attractive,” added Chawla.
Read the full story here.
responsAbility backs Mexican producers with $25m credit
responsAbility drew from its Sustainable Food LatAm fund for a $25 million credit investment in Campos Borquez, a Mexican organic fruit and vegetable producer.
Campos Borquez supplies table grapes, asparagus, mangoes, avocadoes and other crops to customers that include Whole Foods, which awarded the company its 2022 global supplier of the year award.
The financing provided by Switzerland-headquartered responsAbility will support balance sheet restructuring and expansion projects for the company, which is run by the fourth generation of the Borquez family.
The predominance of family-run business in Latin American ag shaped the strategy of the Sustainable Food LatAm fund and encouraged a stronger focus on primary production rather than agribusiness, responsibility head of sustainable food private equity Rik Vyverman told Agri Investor in February.
The vehicle had then reached a $101 million first close toward a hard-cap of $350 million, which the firm expects to reach next year.
VC fundraising
Source.ag, a Dutch AI greenhouse management services start-up, raised $4 million in additional funding from SK networks and MIT-affiliate E14 fund. The business closed a $23 million Series A in February.
The Green Coffee Company, a Colombian coffee producer, raised $25 million in Series C equity funding round. The company’s financing to date has been funded by more than 450 individual high-net-worth individual investors primarily from the US.
PartnerSlate, a Californian online marketplace connecting food brands and contract manufacturers, raised $4 million in a funding round led by Supply Change Capital, with participation from Cleveland Ave, ResilienceVC, Pacific Fin Capital, Mentors fund, Newlin VC, and the MBA fund.
Upcycled Plant Power, a British broccoli protein innovator, has received an £800,000 ($1 million; €935,000) grant from government to continue exploring the use of unharvested broccoli crop biomass for plant-based proteins and ingredients.
Also in the news…
CalSTRS, PSP, Harvard and Microsoft back Generation IM’s $1.5bn Just Climate fund The ‘flexible capital’ approach of Climate Assets Fund I can be challenging to pitch to LPs, but Just Climate has clearly succeeded: it has closed its debut fund 50 percent above target (NPM).
Navigating the Kakhovka Dam collapse NASA Harvest assesses agriculture impacts with satellite imagery (Planet.com).
NOVA joins hands with Nopetro to develop renewable natural gas The US government is also pushing policy and funding that promote clean energy use (PE Hub).
Brussels’ mission impossible: Greening agriculture New rules aimed at restoring nature have unleashed a major fight that endangers the EU’s climate agenda (Politico).
California pension fund looks to boost venture capital investments, despite startup market turmoil California Public Employees’ Retirement System, the $457 billion pension that manages public employees’ pensions, has historically had limited venture exposure (CNBC).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp
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