Field Notes: CDPQ and CEFC establish A$200m ag platform; forestry and ag’s attractiveness may be waning; Kilter hits first close on A$500m fund; and deals round-up

CDPQ and CEFC establish A$200 million ag platform; forestry and ag’s attractiveness may be waning; Kilter hits first close on A$500 million fund; and deals round-up. Welcome to Field Notes, the start-of-the-week briefing for our valued subscribers only.

First look

CDPQ and CEFC form Australia alliance
Last week brought news of an unusual deal in institutional agriculture investing: two LPs partnering to take a minority stake in a GP.

The investors in question are Canadian giant Caisse de dépôt et placement du Québec and Australia’s green bank, the Clean Energy Finance Corporation, who together joined forces to acquire a stake of an undisclosed size in asset manager Gunn Agri Partners, headquartered in Sydney. Financial details were undisclosed.

As well as the equity stake in Gunn itself, the two have established Wilga Farming, an investment platform seeded with A$200 million ($135 million; €123 million), that will seek out Australian farmland ripe for transformation and decarbonization. The platform will be managed by Gunn Agri Partners.

It’s CDPQ’s first step into Australian agriculture after several years of consideration, while it’s CEFC’s first time acquiring a stake in an agriculture-focused investment manager following a string of equity commitments to funds managed by Gunn, Macquarie Asset Management and Tenacious Ventures, among others.

“We could have done it on our own,” CDPQ managing director Nicolas Leyssieux tells Agri Investor.

“We’ve done agri and could have put a A$150 million or A$200 million check on the table and have the same type of platform. We really see a value-add in being with CEFC because they know the local environment well and have alignment in terms of strategy and the need for investment in sustainable and regenerative ag.”

Read our exclusive interview here, for which we also spoke to CEFC head of natural capital Heechung Sung about the rationale behind the investment and partnership.

They said it

“This legislation says farmers have to set aside a percentage of their land… at a time when we’re seeing inflation that is mainly driven not by energy costs, but by food costs”

Member of European Parliament and EPP member Esther de Lange speaks out against the EU’s Nature Restoration Law


Mayfair exits Snowfox Group in $621m deal
Mayfair Equity Partners has sold its ownership stake in Japanese food business The Snowfox Group to Zensho, a Japanese food service company based in Tokyo.

The deal is valued at $621 million and will see Mayfair fully exit its stake in Snowfox, but the company’s leadership team and CEO Richard Hodgson will remain with the business.

Zensho was founded in 1982 and is the largest food service business in Japan by sales, according to Mayfair. It is executing an expansion strategy.

Mayfair first invested in London-headquartered Japanese fast casual restaurant group YO! in 2015, after which the asset manager led the company’s 2017 acquisition of Bento, which was founded in Canada in 1996.

YO! then acquired Taiko Foods in 2018, which is a British supplier of sushi and Asian food-to-go to retailers including Waitrose and Costco. The three businesses then merged with Snowfox in 2019, which at the time was the third-largest sushi kiosk business in the US, according to Mayfair – the Snowfox Group was subsequently created in 2021.

Read the full story here.

Arbor backs US waffles business
Arbor Investments has acquired Golden Malted and Heartland Waffles companies from Roch Capital. No financial terms were disclosed.

The combined company becomes the largest supplier of waffle irons and waffle mix to the US hospitality and foodservice industry, said a statement from Arbor.

Arbor’s senior operating partner Tim Fallon will assume the role of chairman and interim CEO of the new company. Senior leadership of Golden Malted and Heartland Waffles will continue in their operating roles leading the business.

Headquartered in Pennsylvania, the business provides a turnkey waffle program consisting of mixes, toppings, and flavorings, along with waffle iron equipment and related maintenance to more than 40,000 customer locations across North America.

Fondo Agroalimentare invests in seafood distributor
Unigrains-backed food investment fund Fondo Agroalimentare Italiano acquired a stake in Urbis Food, a supplier of seafood to Italian distributors and retailers. Financial details were undisclosed.

Urbis Food reported sales of more than €30 million in 2022. FAI will support implementation of the company’s growth plan to expand across Italy from its base in the eastern port region of Marche, as well as strengthening the GiorgioMare brand and doubling sales over the next five years.

FAI’s strategy involves taking minority positions in either growth capital or buyout transactions in the Italian agri-food SMEs space. Target companies generally have sales of between €10 million and €150 million.

The vehicle was established in 2018 by Unigrains, with backing from French, Italian and Swiss institutional investors and family offices.

Fund watch

Kilter’s first close
Australian asset manager Kilter Rural has held a first close on its latest vehicle, the open-end Kilter Agriculture Fund, Agri Investor exclusively revealed last week.

Kilter Rural held a close on A$15 million around the end of May as planned following the fund’s launch, and is on track to secure its initial raise of A$65 million ($44 million; €40 million) by the end of September. The fund has an ultimate target of A$500 million.

The asset manager focuses on acquiring farmland assets and water rights that can be improved to secure an uplift in value while creating an environmental benefit.

The firm operates two funds focused on water – the Murray-Darling Basin Balanced Water Fund and the Kilter Water Fund – as well as the Australian Farmlands Fund, a 10-year closed-end vehicle that closed on A$60 million at the end of 2021.

It previously managed a portfolio of farmland and water assets on behalf of VicSuper, prior to the latter’s merger with First State Super to become Aware Super. Aware Super sold the farmland assets to goFARM Australia in 2022.

Read the full story here.

Natural assets

Verus calls timber’s top and stays neutral on ag
Verus Advisory says a declining rate of inflation and scarcity of exits among energy and timber investors is sapping institutional interest in natural resources.

In mid-June, real assets head John Nicolini provided the $10.6 billion Alameda County Employees’ Retirement Association with a judgement that conditions in timberland markets are “negative” and prospects in agriculture remain “neutral”.

Calling a top for the forests: The presentation highlights that appreciation has been driving recent timberland growth, income’s contribution to NCREIF returns has declined and other indicators raise doubts as to whether recent gains will be durable across regions.

“Land values went up in 2022 due to lower discount rates, but we question how sustainable that will be if cashflows are flat to negative YoY. Housing starts have collapsed in the past 12 months as mortgage rates more than doubled, which is a bearish sign for lumber demand,” according to Verus.

Among potential risks supporting its recommendation against timberland allocations is a lack of liquidity and transactions the consultant said stems from recent years’ “slow to non-existent” fundraising.

‘Neutral’ on ag despite tailwinds: Versus notes structural factors helping make agriculture a more attractive asset class but highlights long hold periods among reasons why “enthusiasm should be tempered”.

“For investors seeking pure-play cropland investments, we would recommend diversifying across row and permanent crops focused on the US market. The fragmented nature of farmland in the US has made scaling a challenge so we would be weary [sic] of strategies seeking to deploy large pools of capital (>$1B),” the firm said.

VC fundraising

Supercritical, a British carbon removal marketplace, raised $13 million in a Series A funding round led by Lightspeed Venture Partners, with participation from RTP Global, Greencode Ventures and MMC Ventures.

Guardian Agriculture, a Massachusetts-based developer of electric vertical take-off and landing (eVTOL) systems for commercial-scale farming, raised $20 million in a Series A funding round led by Fall Line Capital.

Hyfé, a Chicago-based wastewater-to-fermentation ingredients start-up, raised an oversubscribed $9 million seed round led by Synthesis Capital, with participation from The Engine, Refactor Capital, Supply Change Capital, Overwater Ventures, X Factor Ventures and Alumni Ventures.

bitewell, a Colorado-based corporate healthy food health marketplace, raised $4 million in a seed funding round led by Lake Nona Sports, Health Tech Fund and Refinery Ventures, with participation from Trybe Ventures, Mudita Venture Partners, Harvest Ridge Capital and BDMI.

Rhizocore Technologies, a British company that produces fungi to support tree health, raised £3.5 million in a funding round led by ReGen Ventures, Collaborative Fund and Grok Ventures.

Also in the news…

Earth Capital: Animal welfare driving innovation in aquaculture
Consumers are increasingly interested in the origin of their food, and the treatment and welfare of animals (PE Hub Europe).

Bayer agriculture unit sees twice the market thanks to new products
Bayer’s crop science division said new products and services for farmers, beyond its established pesticides and seed technology businesses, would double the size of market it operates in (Reuters).

‘No downside’ to biomethane, says MAPFRE’s Jiménez
The insurer has launched a €100m strategy to invest in up to 25 biomethane plants across Spain over a five-year period (New Private Markets).

Current conservation policies risk accelerating biodiversity loss
Three approaches that aim to cut the harms of agriculture — land sharing, rewilding and organic farming — risk driving up food imports and causing environmental damage overseas. An alternative approach is both effective and cheaper (Nature magazine).

French court upholds agriculture trade deal with Morocco
The ruling comes a few weeks after a UK court also upheld its own trade deal with Morocco, defying Polisario-backed efforts (Morocco World News).

Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp