First look
Regenerative ag for Europe
Regenerate Asset Management has launched a regenerative agriculture fund aimed at making investments to support the European transition to regenerative farmland practices.
The Regenerate European Sustainable Agriculture Fund has received a cornerstone investment of approximately €150 million from M&G Investment’s Catalyst strategy. The firm declined to disclose a fundraising target to Agri Investor but CEO Ben Stafford said it would consider the vehicle a “success” if it can double the initial commitment from M&G.
Livestock, farm businesses and soil: The RESA fund will target agricultural businesses in western Europe that already own farms, and will lead them through a regenerative transition over a period of three to five years. The fund will target low double-digit returns.
“We are not investing in climate in a way that will appeal to everyone,” said Stafford. “We’re focusing on regenerative livestock, we’re focusing on tree crops, we’re focusing on integration and stacking of revenue in order to get microorganisms back in the soil and regenerate the soil.”
Three-pronged approach: As well as the private equity vehicle, Regenerate has also launched an educational program and will launch a venture capital fund to complement the work of the RESA fund.
The firm has already raised and invested a preliminary £3 million ($3.7 million; €3.4 million) venture capital fund and is gearing up to launch the “larger” Regenerate Ventures VC fund, confirmed chief investment officer Ryan Cameron.
Read the full story here.
They said it
“For attracting international or Australian superfund capital, I think what helps a lot is ecosystem services opportunities – so, the biodiversity markets, the carbon markets and export opportunities”
Kristina Hermanson, Nuveen Natural Capital head of APAC and Africa, discusses the attributes drawing LPs to natural capital at the Global Food Forum in Melbourne
Farmland
Australian farmland recorded its ninth consecutive year of growth as the median price per hectare across the country increased by 20 percent to reach a new high of A$8,506 ($5,647; €5,218).
This matches the growth seen in 2021, when values also increased by 20 percent to hit A$7,087 per ha, according to Rural Bank’s Australian Farmland Values 2022 report.
Supportive environment = striking numbers: During the last nine years of growth, the national median price per ha has risen by 167 percent at a compound annual growth rate of 11.5 percent. The CAGR over the past 20 years is 8.5 percent.
The market was supported in 2022 by high commodity prices, high demand, above-average rainfall and the fact interest rates did not begin to rise in Australia until the end of the year.
Rural Bank said the key drivers of farmland values “are set to remain in favor of demand exceeding supply in 2023, driving a 10th consecutive year of growth in the national median price per ha,” although it predicted that growth would be lower than in previous years.
Read the full story here.
Agtech
India could become a farming powerhouse
Agriculture could contribute roughly $600 billion to India’s GDP by 2030, which would be equivalent to an increase of 50 percent on its contribution in 2020, says a McKinsey report on the country’s agtech adoption.
India’s farmers are currently competing at a disadvantage, says the report, with 50 percent of farmers lacking basic equipment. Three out of every four farms are at risk of crop damage from pests and weather, and half of India’s farmers lack access to traditional financing sources. Those who can get credit often pay inflated interest of 10-25 percent above market rates.
Indian VC investments on the up: Total venture capital funding into the country’s agtech start-ups has risen from $200 million in 2018 to $1.2 billion in 2022, according to the paper, as the likes of Accel and Sequoia Capital have invested in companies such as Samunnati, Ninjacart, DeHaat, and Bijak.
The country’s farming sector is already benefiting from a wider range of services being offered by a growing number of agtech businesses, which have increased from less than 50 in 2013 to more than 1,000 by 2020. India’s regulatory environment is also gradually evolving to facilitate the growth of digital technologies in agriculture.
Carbon
Prices are down but market shows resilience
Governments are prioritizing direct carbon pricing policies to reduce emissions in a more sophisticated way, despite economic and geopolitical instability combining to reduce the number of carbon credits being issued and retired over the past year, says the World Bank.
The 10th edition of its State and Trends of Carbon Pricing report says trading systems, taxes and crediting schemes have grown to cover about 23 percent of global emissions, as the market has shown resilience and developments on Article 6 suggest a pathway for international carbon markets.
Carbon credit growth slows: The report notes prominent critiques of carbon credits and offsetting have been among the most important drivers of activity in 2022 – a year that saw a decline in prices across credit categories, which was especially pronounced in the nature-based sources that include carbon farming.
The World Bank cites data from a variety of private providers in quoting prices that fell from a high of $16 per credit to $5 by the end of Q1 2022.
New Zealand leads the way on ag carbon tax: The report also highlights New Zealand’s plans to price agricultural emissions under its ETS by 2025, as an important test case for efforts to expand the market beyond traditional sectors such as energy. The World Bank writes that the New Zealand effort is being watched closely by regulators in Denmark and elsewhere, where similar initiatives are being considered.
“Expanding carbon pricing to agricultural emissions comes with its own set of challenges, with stakeholders raising concerns about impacts on food security, limited opportunities to reduce emissions from agricultural activities (and associated risks of carbon leakage), interactions with pre-existing market distortions and difficulties ensuring robust monitoring, reporting and verification.”
Agtech fundraising
Restaurant365, a Californian restaurant management start-up, completed a $135 million funding round led by KKR and L Catterton. The round was backed by existing investors ICONIQ Growth and Bessemer Venture Partners.
Pluton Biosciences, a US-based start-up developing a microbial cover crop, raised $16.5 million in a Series A funding round led by Illumina Ventures and RA Capital. Fall Line Capital, The Grantham Foundation, and First In Ventures participated alongside existing investors.
eFishery, an Indonesian aquaculture services company, raised $108 million in Series D, which pushed the businesses into unicorn status with a valuation of $1.3 billion. The round was led by 42Xfund with participation from existing investors Northstar Group and SoftBank Vision Fund II.
Incredo, an Israeli foodtech company, raised $30 million in a Series C funding round co-led by DSM Venturing and Sienna VC, with participation from Ferrero, Teseo Capital and insiders Pitango and BlueRed Partners.
Satellite Vu, a British climate-tech company, raised £12.7 million ($15.6 million; €14.6 million) in Series A2 funding round led by Molten Ventures. The company intends to use the funds to enter commercial operation.
UNDO, a British climate tech startup that uses volcanic rock dust on farms to capture carbon in the soil, has completed a $12 million funding round led by Lowercarbon Capital and AENU.
Also in the news…
Under the hood of debt-for-nature swaps
The sovereign debt restructuring facility seems capable of solving numerous challenges simultaneously but has some way to go before it becomes an easily replicable way of protecting natural capital (Agri Investor).
AXA, Allianz leave Net-Zero Insurance Alliance
Insurance giants’ departures are the latest in a flurry of exits from NZIA (RI).
UK fund giant L&G bets on Ecuador’s Galápagos debt experiment
Britain’s biggest asset manager buys $250 million of bonds in a sign of growing investor interest in debt-for-nature swaps (FT).
‘No way forward’ without carbon offsets, says Capricorn’s Mattox
Julia Mattox, the firm’s head of IR, says the impact community should not let “perfect be the enemy of good” when it comes to the voluntary carbon market (NPM).
Grain trader Viterra in talks to merge with rival Bunge
The companies are negotiating the structure of a potential transaction with one option being a stock deal where Bunge shareholders would own a majority of the combined group (Reuters).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp.
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