Field Notes: Mitsubishi and UN back $1.5bn climate fund; Mirova and Amundi launch land and debt vehicles; Australia sweats its food security.

Mitsubishi and UN back $1.5 billion blended climate fund; Mirova launches Land Fund II; Amundi hits €130m close on €750m debt funds. Plus: Australia sweats its food security; soil carbon alliance is launched, and more. Welcome to Field Notes, the start-of-the-week briefing for our valued subscribers only.

First look

Field of corn crops in hail

$1.5bn climate debt fund targets ag

Climate Fund Managers has been appointed fund manager for the GAIA blended finance debt vehicle, which will be advised by Pollination and has a $1.48 billion target.

The platform began as an effort between FinDev Canada and Mitsubishi UFJ Financial Group, who have collaborated with the UN Green Climate Fund and other unnamed investors to contribute about $440 million to the vehicle.

The fund is expected to reach a $500 million first close in Q2 2024, with the $1.48 billion target achieved within 36 months. It has a 30-year term and a 15-year investment period to allow for capital recycle.

GAIA’s strategy calls for 70 percent of investments to be devoted to climate adaptation through sectors including food, water, infrastructure, public works and others. The remainder is devoted to climate mitigation investments in transport and industry electrification, green building and mass transport.

“While water, grid and others are probably the easiest ones to start building pipeline around, from an impact perspective, being able to play around food security, climate resilience and agriculture is going to be really important to everyone around the table at GAIA,” Pollination managing director Nick Anstett told Agri Investor.

“A lot of the early blended finance vehicles that the AXAs and Allianz-es and others of the world got involved in were ones that were co-lending with, or buying participations in loans issued by, the MDBs [multilateral development banks],” he added. “A lot of institutions are already quite familiar with blended structures that are lending to sovereigns.”

Read the full story here.

They said it

“If you look at casual dining, or other segments within the restaurant space, those are all down this year as consumer sentiment has gotten worse. However, folks have traded into fast casual”

Butterfly Equity principal Francesco D’Arcangelo discusses the $305 million debt restructuring of fast casual restaurant company QDOBA, whose strong performance allowed it to secure terms that will save $7 million per annum in interest payments

Fund watch

Fondaction closes Inlandsis II on C$130m

Canadian asset manager Fondaction Asset Management has closed its Inlandsis II fund on C$130 million ($96 million; €88 million).

The greenhouse gas emissions reduction vehicle held a first close on C$115 million in December 2022 and is being managed alongside partner firm Priori-T Capital.

Inlandsis II invests in small to medium-sized projects in North America that seek to capture and destroy methane and carbon emissions from livestock manure management systems, abandoned coal mines and forest rehabilitation programs.

The firm receives distributions in the form of carbon credits, which it then trades on voluntary and compliance markets to generate a return.

“Very often these projects will generate credits over 15 or 20 years,” principal investment adviser Philippe Crête told Agri Investor at the start of the year, following the fund’s first close.

“Our fund has a lifespan of 10 years,” said Crête, “and, depending on which point we’re coming into the equation, generally we’re out of their hair in five to seven years. We get the rights to these credits once they’re registered and we sell them right away. We generally have offtakers who are waiting for them or we sell them to the spot market.

“Unlike other funds that invest in forest carbon or ag carbon, we generally don’t own the underlying asset. We don’t invest in land and we don’t invest in timber. We invest in carbon.”

Read the full story here.

Amundi hits €130m first close on €750m debt fund

Amundi Real and Alternative Assets has held a €130 million first close on its Amundi Ambition Agri-Agro Direct Lending Europe Fund.

The fund has a €750 million fundraising target and the first close capital was provided by Amundi’s parent company, Crédit Agricole Group.

Amundi Ambition is an Article 8 impact fund that will provide senior, unitranche and subordinated debt instruments to European agriculture and food businesses transitioning to more sustainable production methods.

Crédit Agricole Group’s backing for the fund is part of its societal project, which is a 10-point initiative made up of environmental targets and support for the transition to a low-carbon economy.

“We identified with Crédit Agricole that the group was not involved in unitranche or mezzanine and all these other non-dilutive financing instruments, therefore they decided that this was a good complement to their offering,” Amundi head of private debt Thierry Vallière told Agri Investor.

The closed-end fund will seek to make between 20-30 investments in SMEs, mid-sized businesses and co-operatives, with an average ticket of between €30 million-€40 million.

Target businesses will have EBITDA of €3 million-€20 million, with those in the €10 million-€15 million range being in the “sweet spot” for the fund, said Vallière.

Read the full story here.

Mirova launches €350m Sustainable Land Fund II

Natural capital investment manager Mirova has launched its latest land restoration strategy and confirmed its €208 million Land Degradation Neutrality Fund has completed deployment.

Mirova Sustainable Land Fund II will invest in agroforestry, sustainable forestry and regenerative agriculture projects in developing countries.

The blended finance vehicle will deploy capital mainly through debt financing as it emulates the approach of the LDN Fund.

Mirova head of natural capital Gautier Quéru said in a statement: “In an international regulatory framework that is encouraging companies and investors to take greater account of their impact on the climate and nature, this new fund dedicated to the restoration and protection of terrestrial ecosystems should enable investors to embrace the strong trend aimed at transforming the value chains most dependent on nature, while targeting a financial return by drawing on Mirova’s proven experience in this area.”

The LDN fund closed three transactions to complete its deployment. The vehicle invested in Koa, a Swiss-Ghanaian B Corp that seeks to add value to the cocoa value chain; Pamoja, a sustainable macadamia nut production benchmark organization in Kenya and Tanzania; and Terrasos, a Colombian company that conserves biodiversity-rich land through habitat banks.

Read the full story here.

Allianz brings in $1.1bn for SDG blended climate debt fund

Allianz Global Investors has raised $1.1 billion for a blended finance vehicle targeting the UN’s Sustainable Development Goals with support from FMO and Skandia, among others.

The SDG Loan Fund has also secured a $25 million credit enhancement from the MacArthur Foundation and will provide loans to local companies in Latin America, Africa and Eastern Europe that support improvements in affordable energy, financial inclusion and sustainable agriculture.

In a statement, Skandia chief investment officer Lars-Göran Orrevall called the blended finance structure used in the vehicle a pioneering one, and said it addresses the funding gap for SDGs in frontier markets while providing “attractive risk-adjusted returns”.

“The fund’s three target sectors – energy, financial institutions and agribusiness – are also pivotal in our joint efforts to increase the world’s climate resilience and reducing our carbon footprint,” he added. “We believe our customers will be excited to be part of the SDG Loan Fund’s journey.”

See the full release here.

Soil carbon

Stakeholders convene International Soil Carbon Industry Alliance

A new industry group aiming to accelerate carbon sequestration in agriculture has launched at COP28.

The International Soil Carbon Industry Alliance was announced Tuesday, which was also World Soil Day.

The ISCIA comprises 28 organizations across two chapters in Eurasia and Pacific-Americas, and brings together experts in modelling, measuring, and carbon markets.

The alliance aims to overcome barriers in accounting methods, soil carbon credit integrity, technology, and finance, with member organizations sharing knowledge to develop soil carbon sequestration around the world.

Founding members include Australian chemical company BASF, US agricultural technology firm Indigo Ag, Canadian fertilizer company Nutrien, and German tech platform GreenTrade.

According to the UN’s Intergovernmental Panel on Climate Change, soil carbon sequestration has the potential to remove up to five gigatonnes of carbon dioxide equivalent each year if land management practices see improvements.

“But progress is not happening quickly enough; the private sector is eager to scale collaborative international action – today,” CEO of GreenTrade Frederick Leuschner said.

Food security

Iconic Australian BBQ close up of cooking chops, sausages and steak, outdoors in garden setting

Australia’s food security concerns       

The Australian Parliament’s Agriculture Committee has published a report into food security in the country, following an inquiry into the subject that considered the topic and how it could affect food production, supply chains and key inputs.

The report comes with a list of 35 recommendations but the most significant include calls for the government to create a comprehensive National Food Plan that considers food security; appoint a minister for food; establish a National Food Council, develop a National Food Supply Chain Map; and enact measures to eliminate food waste.

Committee chair, Meryl Swanson MP, said in a statement: “Despite Australia being one of the most food-secure countries in the world, recent developments both at home and abroad have shown that food security presents real and growing challenges to the nation.

“Food security is not something that any of us can take for granted. Covid-19, floods, the effects of the war in Ukraine, and outbreaks of foot and mouth disease and lumpy skin disease in Indonesia have highlighted risks to our food system.

“Systemic change is required so that all Australians, and those that depend on Australian food production, will be food secure. Consultation, co-operation, co-ordination and innovation are the keys to food security.”

The committee held 24 public hearings over the course of its inquiry.

Read the full report here.

Deals

OTPP invests in Australian fruit grower Montague

Ontario Teachers’ Pension Plan has entered into a strategic partnership with Australian fruit grower Montague.

The Canadian fund’s investment will be made via its subsidiary Pomona Valley, which will acquire a majority equity stake in Montague.

Pomona Valley is managed by OTPP’s Australian agriculture arm AustOn, which has operated in the country since 2018.

Under the deal, Pomona Valley and Montague will merge to form one business, with Montague managing director Scott Montague retaining an ownership in the merged business and taking on the role of general manager.

Montague is a vertically-integrated grower, packer and marketer of fruit in Australia with a 70-plus-year history. It is billed as the “category leader” across apples in Australia, supplying produce to major supermarkets and wholesalers across the country as well into export markets.

Pomona Valley grows and packs stone fruits and pome fruits in the Goulburn Valley of Victoria. AustOn also manages Arooma Farms, which produces almonds in South Australia and VIC; Jasper Farms, which produces avocados in Western Australia; and Mitolo Family Farms, which grows potatoes and onions.

Read the full story here.

EagleTree acquires Summit Hill Foods

EagleTree Capital has acquired Summit Hill Foods, owner of The Original Louisiana Hot Sauce, for an undisclosed price.

The firm said that several of EagleTree’s fund co-investors had invested in Summit Hill alongside the fund manager, including Misland Capital, and Summit Hill’s operations and management teams will remain in place following the investment.

EagleTree has acquired the firm from G&L Holdings, the parent company of Summit Hill Foods. All other terms of the deal were not disclosed.

Summit Hill Foods began life as a family-owned bakery in Rome, Georgia in 1941, and has developed into a large branded food company that owns several nationally-recognized brands in the US, including the aforementioned Original Louisiana Hot Sauce, as well as Better Than Bouillon and Better Than Gravy.

The firm also provides bases and sauces to restaurant, food service and industrial partners. EagleTree Capital is a New York-based mid-market private equity firm with more than $5.6 billion of assets under management. It invests primarily in the consumer, water, specialty industrial, and media and business services sectors.

Read the full story here.

VC fundraising

Koa, a Swiss-Ghanaian start-up established to shift coca farming to regenerative and climate-smart agriculture, raised a $15 million Series B round led by Mirova with participation from Zebra Impact, Mirabaud and Haltra, among others.

Clever Carnivore, a Chicago-based cultured meat company, raised $7 million in a seed funding round led by Lever VC with participation from McWin Capital Partners, Thia Ventures, Valo Ventures, Newfund Capital, and Stray Dog Capital.

Farmless, a Dutch fermentation start-up, secured a €4.8 million seed funding round co-led by World Fund and Vorwerk Ventures, with participation from Revent.

Meatiply, a Singaporean cultivated meat company, raised $3.75 million in the first round of its seed funding, which was co-led by co-led by existing investors Wavemaker Partners and AgFunder, with participation from Seeds Capital.

Carbon Maps, a French start-up that helps the food industry reduce its environmental footprint, raised a €3 million pre-seed round backed by Breega, Samaipata and Daphni, among others.

Also in the news…

Moving markets and winning awards

TPG made its presence felt in 2022 with head-turning forestry deals and awards wins – and it has now been named by the UAE as one of three ‘launch partners’ for its $30 billion climate investment vehicle (Agri Investor).

How UAE’s Alterra is taking emerging markets impact mainstream

With TPG, Brookfield and BlackRock launching Global South climate strategies, large-scale institutional capital may finally be destined for emerging markets (NPM).

Climate fundraising boom continues as Congruent collects $275m

Fund III’s investors include CalSTRS, the Grantham Foundation and the University of California, among others (VCJ).

GrI stands board to approve updated biodiversity standard

In response to feedback, initiative has reviewed requirements to report on supply chain impacts and state of biodiversity ‘to ease the reporting challenge’ (Responsible Investor).

Tanzania signs major carbon credit deal covering national parks

Tanzania has signed a deal for one of East Africa’s biggest land-based carbon credit projects (BBC).

UK government launches £2bn engineering biology effort

The initiative will target healthcare, food and the chemical industries to create more sustainable solutions (UK Govt).


Today’s letter was prepared by Binyamin Ali, Chris JaniecDaniel Kemp  and Tom Taylor.