First look
Macquarie folds green fertilizer into energy transition strategy
Macquarie Asset Management’s October investment into Swiss green nitrogen company Atlas Agro was prompted by an ongoing revaluation of what constitutes an infrastructure asset.
The asset manager, which has substantial infrastructure and agriculture portfolios, deployed capital from its GIG Energy Transition Solutions Fund to make the $325 million investment. The vehicle aims to support decarbonization through support for businesses operating in areas of the transition to a low-carbon economy more nascent than wind and solar electricity generation.
William Demas, the head of Macquarie’s green investments in the Americas, told Agri Investor the MGETS vehicle’s focus on nascent areas of the energy transition beyond wind and solar reflects an ongoing re-examination among investors of what constitutes “infrastructure”.
“Infrastructure investors are interested in some ag-type deals because if those underlying deals have the characteristics that we are used to in in transportation, logistics, power or digitalization then we can very comfortably invest,” said Demas. “That is beginning to come together and that is what is attracting infra LPs into the sector.”
Atlas Agro is currently in the engineering and design stage for its first project, which is to be located in Richard, Washington and support production of fertilizers used throughout the Pacific Northwest region. The facility has attracted support from the US Departments of Energy and Agriculture and Atas Agro says it marks the first step in a “new green revolution in agriculture” driven by localized production of fertilizer from green hydrogen rather than natural gas.
Demas added that his team has investigated indoor farming, on-farm power use and other corners of food but chose Atlas Agro for their first ag-related investment partly due to the pressure on agricultural supply chains to show progress reducing their carbon footprint.
“Once we have commercialized this product and proven we can build these facilities at scale and proven we can catalyze infrastructure-like capital to support the build-out, this will be very attractive to large fertilizer businesses and other agriculture businesses that want to participate in the decarbonization journey,” he said.
Read the full story here.
They said it
“I don’t want to look back after 10 years again in my career and regret. I don’t want to regret the inaction on human rights and I don’t want to regret that we didn’t make the world a more socially equitable place”
Manulife Investment Management chief sustainability officer Biran Kernohan, speaking at the Impact Investor Summit, said a similar effect to that which was achieved by Al Gore’s 2006 documentary An Inconvenient Truth on climate change, is needed around global wealth inequality.
Fund watch
Warakirri’s new open-end farmland fund
Warakirri Asset Management, one of the sector’s largest farmland asset managers, is returning to market with its first commingled fund targeted at institutional investors in more than eight years.
The firm has launched the Sustainable Broadacre Cropping Strategy, an open-end fund that will invest in a range of assets across Australia’s major grain production regions.
Warakirri managing director Jim McKay told Agri Investor the firm is aiming to build a portfolio of assets worth between A$750 million and A$1 billion ($650 million; €610 million), implying an equity raise for the fund of between A$500 million and A$750 million. The firm expects to take two to three years to establish its initial portfolio.
On the word ‘sustainability’ appearing in the fund’s name, McKay said: “There are two key drivers for this. There is a shortage of food globally and we have reached peak farmland, therefore we have to maximize productivity to deliver better outcomes and feed the world. And people want to do that while also reducing their carbon footprint.”
Read the full story here.
Emissions
Asia’s food challenge
A new report published jointly by PwC, Rabobank, Temasek and Terrascope has found that the agri-food industry accounts for more than a third of global carbon dioxide emissions. This is even more pronounced in South and Southeast Asia, where it makes up more than half of all emissions.
The third edition of the biennial Asia Food Challenge Report found there is a significant opportunity here, given it is possible to reduce carbon dioxide equivalent emissions from the agri-food sector in Asia by 12 percent before 2030, equivalent to all the emissions produced by the global aviation industry in 2022.
To do so will require around $125 billion in investment, mainly in farm-level equipment and machinery on rice and cattle farms, as well as in other infrastructure improvements and on other farm types.
Temasek head of agri-food Anuj Maheswari said in a statement: “Decarbonizing Asia’s agri-food sector is critical to reduce the effects climate change has on our food resilience. To do so, we need to prioritize the deployment of existing, readily available, and actionable solutions that can be scaled across the agri-food value chain and channel capital to catalyze the technology to accelerate decarbonization in Asia and globally.
“This will enable the transition toward a greener and more sustainable agri-food system so every generation prospers.”
Read the full report here.
Irrigation
Carlyle plants European roots in irrigation market
Nasdaq-traded Carlyle announced the creation of a platform aiming to provide a one-stop-shop across all irrigation technologies.
The new company, the Farmfront Group, is headquartered in Milan, Italy and will combine operations of four irrigation providers acquired by The Carlyle Europe Partners platform since 2022.
These include Irrimic of Piacenza, Italy; Otec of France; Spain-headquartered RKD; and Ocmis Group, which is headquartered in Modena, Italy and was acquired by Carlyle last year.
“Globally, just 18 percent of arable land is being irrigated, and of that, just a quarter is being irrigated with efficient technologies. Farmfront aspires to change this status quo, with plans to deliver cutting-edge and digitally enabled irrigation services across the platform, ultimately helping farmers improve their profitability, efficiency and the sustainability of their daily operations,” said Farmfront chief executive Daniel Neves in a statement.
According to his LinkedIn profile, Neves’ experience includes two years as president for Southern Europe at Netafim, an irrigation technology provider founded on a kibbutz and later sold to Mexican chemicals company Mexichem by Permira.
Read Carlyle’s announcement in full here.
VC fundraising
Ovo, a Dutch start-up commercializing technology that introduces efficiency into poultry production through sensors that determine hatching egg gender, secured a €40 million loan facility from the European Investment Bank through its InvestEU program.
Amos Dairy, a producer and exporter of dairy goods headquartered in Uganda, secured a $10 million investment from, EXEO Capital’s Agri-Vie Fund II.
BiomEdit, an Indiana-headquartered start-up developing microbiomes that reduce emissions and increase feed efficiency in beef and dairy cattle, received a $4.5 million grant from the Bill & Melinda Gates Foundation.
Also in the news…
Intuitive edge: Agriculture is among the more easy-to-explain elements of the emerging climate tech market, according to an Activate Capital manager with experience across industrial sectors (Venture Capital Journal [registration required]).
Ties tame through trade? USDA’s decision to send a delegation to a trade fair in China came soon after 11 trade agreements for American corn, wheat and other commodities were signed earlier in October and was interpreted as part of an effort to foster cooperation between the US and China (Global Times).
Trouble in Timberland: A man was reportedly arrested at Miami International Airport on charges of having fled to Latin America in 2014 upon learning he was under FBI investigation for mismanaging funds of New Hampshire-headquartered timberland manager Global Forest Partners (WMUR.com).
Ag driving climate catastrophe tipping point says UN: “Drastic changes” to the global agricultural system will be required to avert risks related to groundwater depletion, according to a United Nations report that highlighted that trend as among six “risk tipping point” already changing lives across the world (Phys Org).
Agribusiness + finance = natural capital: Cibus Capital hired Kathleen Weldon, an executive with experience at Louis Dreyfus Company, JPMorgan, Blackstone and BlackRock, to fill a newly created natural capital position focused on investments and portfolio company best practice (Agri Investor).
Today’s letter was prepared by Chris Janiec and Daniel Kemp.
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