First look
H1 fundraising slumps to 12-year low
Fundraising for agrifood and forestry funds in H1 2023 dropped to $1.4 billion, down from $2.5 billion in H1 2022 and $4.4 billion in 2021. The capital raised for H1 2023 represents the lowest half-year fundraising figure since 2011, when the market collected $1.2 billion.
The numbers come from the Agri Investor database, and is based on final closes of all closed-end funds and vehicles dedicated to agrifood and forestry. The numbers also take into account separate accounts and co-investment funds.
The report excludes vehicles that invest in agrifood and forestry assets opportunistically, which is why the numbers are lower than those available on our full online database.
Despite the low fundraising total for H1 2023, an average vehicle size of $220 million represents an increase on the H1 average of $161 million in 2022. The full-year average vehicle size in 2022 was $162 million, while the full-year average figure for 2021 stood at $181 million, and was $165 million in 2020.
Overall fundraising figures for 2023 – particularly those for average vehicle size – could be impacted dramatically by decisions at Paine Schwartz Partners.
The firm’s 2022-vintage Food Chain VI vehicle has already taken $1.6 billion in commitments against a $1.5 billion fundraising target. If the firm chooses to close the fund before year-end, it would singlehandedly more than double the H1 take ($1.4 billion) and result in a big upswing in the average vehicle size figure ($175 million).
See the full story and our interactive fundraising report here.
They said it
“[Producing cultivated meat] is closer to beer brewing than it is to animal rearing”
Following a $35m raise, Meatable co-founder and chief technology officer Daan Luining discusses plans for further fundraising and production processes
Lawsuit
Paine Schwartz’s stone fruit deal goes sour
A member of the founding family of stone fruit producer Gerawan Farming is suing Paine Schwartz Partners for breach of its fiduciary and contractual obligations.
Gerawan Farming was merged with Paine Schwartz-backed Wawona Farming in 2019 to create Prima Wawona. Daniel Gerawan, the Plaintiff in the lawsuit, was president of Gerawan Farming at the time of the merger and served as CEO of the combined entity until 2020.
The lawsuit, which was filed in June with the State of Delaware’s Court of the Chancery, alleges that Paine Schwartz executed business initiatives involving the company without sufficient authority and oversight; the firm used its controlling position to “enrich others” through consulting fees; staffed the company with “managers and officers who made disastrous decisions”; and breached multiple provisions of the Services Agreement signed as part of the merger, which detailed the management services Paine Schwartz would provide.
Daniel Gerawan invested $140 million into the merger deal, according to the lawsuit, making him the largest individual shareholder, while entities controlled by Paine Schwartz held a majority holding in the business, having contributed $420 million in assets and cash to create a $560 million entity.
Gerawan is seeking to recover the loss of at least $50 million.
Moody’s downgraded the rating of MVK Intermediate Holdings, the LLC which owns Prima Wawona, from Caa1 to Ca in June 2023.
Moody’s defines obligations rated Caa as speculative, of poor standing and subject to very high credit risk, while obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
Paine Schwartz declined to comment. Gerawan’s lawyer, A. Thompson Bayliss of Delaware-headquartered Abrams & Bayliss LLP, did not reply to messages seeking further detail.
Carbon
Nature-based solutions are biggest source of credits
Carbon credits issued through nature-based solutions accounted for 37 percent – or 53 million credits – of all issuances in H1 2023, according to data from Climate Focus. A total of 143 million credits were issued in the first half of the year across global voluntary carbon markets.
Renewable energy was the second-highest source of credits, with 39 million credits (27 percent) issued through power generation projects. However, the sector’s influence has started to wane, with issuance levels for renewable energy projects sliding back to 2020 levels, with the drop to 39 million credits in H1 2023 representing a 25 percent fall compared with the same period last year.
Meanwhile, retirements of carbon credits in H1 2023 plateaued at similar levels as last year (79 million). “If the past H2 retirement trend holds, we predict that in total 165 million credits will be retired by the end of 2023,” said Climate Focus. “This would set a new record. The H1 2023 retirements represent nearly 10 percent of all retirements since the market inception [in 2002].”
Climate Focus’s live online database shows a total of 756 million unretired credits in the market.
Report author Szymon Mikolajczyk told Bloomberg the discrepancy between carbon credit issuances and retirements could partly be due to buyers purchasing credits speculatively, or for future use.
“These all contribute to a growing volume of non-retired credits, but do not by themselves indicate dropping aggregate demand. The price is a better reflection of demand,” Mikolajczyk said.
Read the full story here.
Debt-for-nature swap
Gabon unlocks $125m for ocean conservation
Gabon became the latest country to complete a debt-for-nature swap, as the west African nation restructured $500 million of government debt to unlock $125 million for ocean conservation.
DFN swaps are a sovereign debt restructuring facility that allow borrower nations to lower their repayment obligations, with the savings being used for nature conservation instead.
Discussing May’s Ecuador DFN structured by Climate Fund Managers, Latin America regional head Juan Paez told Agri Investor: “The involvement of the US International Development Finance Corporation provides the arbitrage opportunity because their involvement allows us to exploit the differential in the credit risk between the Ecuadorian sovereign and the US government sovereign. So, that allows for amplitude of space, and then we can translate some of those savings to the government and some of those savings go to conservation.”
The US International Development Finance Corporation provided $500 million in political risk insurance to the Gabon DFN, with the Bank of America acting as the sole initial purchaser, structuring agent and bookrunner.
The 15-year program will see Gabon pay into an independent Conservation Fund, for which The Nature Conservancy will act as project manager and technical adviser, as well as paying into an endowment that will continue to fund conservation after the bonds are repaid.
DFNs are still a nascent nature financing tool. Climate Fund Managers CEO Andrew Johnstone told Agri Investor in May: “The process is still inefficient. There are multiple parties involved with multiple interfaces. The consequence is that it takes quite a long time to actually curate and to bring the transaction to fruition, and over this period there could be political cycles and elections, financial market changes and changes in actors along the way.” Despite this, Johnstone believed there would be room for commercial investors to participate as the market matures.
Further reading: Under the good of debt-for-nature swaps
People moves
New sustainability head at Stafford
Stafford Capital Partners has hired Marta Jankovic as head of sustainability.
She will focus on shaping Stafford’s sustainable investing strategy, fostering engagement with clients, policy and industry stakeholders. She will drive the delivery of client sustainability objectives, from due diligence, to implementation, monitoring and reporting.
Jankovic has previously held roles at BlackRock, APG Asset Management and Invest Europe across a career that spans more than 15 years.
CBRE’s Australia appointments
CBRE has made two internal appointments to the leadership of its Australian agribusiness team.
John Harrison steps up to become head of the firm’s agribusiness capital market team, having previously led its agribusiness valuation and advisory services team. Before joining CBRE in 2022, he spent more than 10 years in various roles at Colliers.
Simultaneously, Angus Shaw has been promoted from his role as a director to take on Harrison’s previous role as head of valuation and advisory services. The appointments follow the departure of David Goodfellow as managing director earlier this year.
VC fundraising
Yard Stick, a Massachusetts-based soil carbon measurement technology company, raised $10.6 million in Series A funding round led by Toyota Ventures Climate Fund with participation from Microsoft Climate Innovation Fund, The Nature Conservancy, Lowercarbon Capital, Breakthrough Energy Ventures and Pillar VC.
Phospholutions, a Pennsylvania-based sustainable fertilizer developer, raised a $10 million fund round led by Advantage Capital with participation from Conti Ventures, Tekfen Ventures, Maumee Ventures, and Ben Franklin Technology Partners.
Clean Food Group, a British foodtech start-up, raised £2.3 million ($2.9 million; €2.7 million) in a pre-Series A funding round backed by Doehler Group, Alianza Team, Agronomics and SEED Innovations.
D’Amelio Brands, a California-based cross-platform company, received a $5 million strategic investment from Fifth Growth Fund to support the start-up’s expansion into the food and beverage sector with the launch of D’Amelio Foods.
Robomart, a California-based start-up developing an autonomous mobile grocery store concept, secured $2 million in a seed funding round.
Beloit Kombucha, a Wisconsin-based organic kombucha start-up, raised $800,000 in a seed funding round led by Grey Collar Ventures, with participation from Battle Born Venture (BBG), gener8tor and other seed and angel investors.
Also in the news…
Traditum PE launches evergreen UK farmland fund
The firm wants to build up to a portfolio worth £100 million ($127 million; €117 million) and is targeting a 10-12% IRR (Agri Investor).
Briefing: Paine Schwartz teams with EQT and AM FRESH for genetics merger
The deal means a partial realization of Paine Schwartz’s 2019 investment into Special New Fruit Licensing (Agri Investor).
US airlines ally with farmers to seek subsidies for corn as jet fuel
Aviation regarded as new market for refiners as electric vehicles endanger demand (FT).
Fake meat is bleeding, but it’s not dead
Yet, Beyond Meat’s weak sales led to headlines about “peak veganism” and the end of plant-based meats. But demand in Europe shows there’s still life in alternative proteins (Wired).
LAWD expands with addition of McCulloch Agencies’ real estate arm
Australian property consultant and agent LAWD will add the real estate division of McCulloch Agencies to the firm on 1 September, with Daniel McCulloch becoming a LAWD shareholder and senior director of agribusiness transactions at the firm. (LAWD).
Anti-ESG cases could end up before Supreme Court, warns former DC attorney general
Karl Racine, now a partner at Hogan Lovells, warns of chilling effect from antitrust investigations despite ‘far overstated’ nature (Responsible Investor).
UK ministers criticised for scrapping new food waste laws for England
Mandatory reporting for large and medium-sized businesses would lower prices and help climate, say campaigners (Guardian).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp
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