First look
Omnivore hits $150m first close
Venture capital farm Omnivore has reached a first close of $150 million for its third fund, the Omnivore Agritech & Climate Sustainability Fund.
The vehicle, which launched in April 2022, will follow a similar strategy to Omnivore’s two previous vehicles, investing in Indian start-ups that are developing “breakthrough technologies for agriculture, food, climate and the rural economy.”
Investors in the first close include KfW, the Self Reliant India Fund, FMO, the Swiss Investment Fund for Emerging Markets, the International Finance Corporation with support from the Bill & Melinda Gates Foundation Inclusive Agritech Facility, Louis Dreyfus Company Ventures, the Dutch Good Growth Fund, the Belgian Investment Company for Developing Countries and Yara Growth Ventures.
It’s a strong result for Omnivore, after co-founder Mark Kahn told Agri Investor in early 2022 that the third fund was targeting $130 million, meaning the first close has already exceeded that amount.
Kahn said that India’s decentralized agriculture sector was presenting opportunities for digital-led agtech investments.
“Indian ag has 130 million smallholder farmers, yet that incredible desegregation aggregates some of the largest crop and livestock production numbers in the world. India is the largest producer of milk, pulses, spices and cotton, and the second-largest producer of sugar, fruit and vegetables,” he said.
“It’s an interesting system, and alongside that there are millions of retailers, traders and middlemen, so people are making investments that are building a digital layer over that hyper-fragmented, decentralized agricultural economy. Whether you call those farmer platforms, embedded fintech plays, or digital marketplaces – that’s a lot of what is going on.”
The firm raised $82 million for its second fund, which closed in 2019, with portfolio companies including DeHaat, Arya and Aquaconnect.
They said it
“There isn’t resistance out of principle – I would say superannuation funds have a lot of guardrails that they have to work within that create challenges for them”
CEFC head of natural capital Heechung Sung discusses some of the reasons why Australia’s pensions continue to keep a distance from agriculture
Fund watch
Proterra’s US play
Proterra Investment Partners is investing in US farmland for the first time, following the launch of its latest farmland investment vehicle, Fund V.
The firm has previously focused on investments in Australia and Latin America but feels that the time is now right to make a play in the US and will leverage its pre-existing relationship with Cargill (from which it spun out in 2016) to source farmer partners.
The sale-and-leaseback strategy will primarily target cropping assets in the Midwest but will also consider investments in farmland in the Pacific Northwest and some southern states, including Texas and northern Louisiana.
The fund is set to hold a first close soon, Agri Investor understands, with a fundraising target of up to $500 million.
Fund V will continue Proterra’s strategy of building portfolios of smaller assets with scope for improvement into larger aggregations split across several hubs, growing a diversified range of crops. The team has generally steered clear of large-scale competitive processes to build its portfolios.
Read our exclusive story here.
Commodities
AgIS flags stockpiling impact on commodity prices
Boston-headquartered AgIS Capital sees changes in China’s approach to agricultural stockpiles as an overlooked factor driving divergence of row and permanent crop returns since 2020.
In its annual State of the Market overview, the farmland manager provides a summary of recent USDA and NCREIF reports and concludes that the US rural economy has remained resilient despite several external shocks.
Inflation dragging permanent crops? Permanent crop focused AgIS said it has been approached by many institutional investors asking whether inflation has been the key driver for row crops outperforming permanent crop returns for the third consecutive year in 2022. AgIS, however, highlights that production issues including drought in Argentina, strong oilseed demand and tight global stocks have driven the divergence.
“In fact, inflation is generally a symptom, rather than a cause of such challenges,” the firm said.
China stockpiling favors grains: The role of Chinese Communist Party (CCP) policymaking in driving outcomes in global ag is often overlooked, according to AgIS. Its report provides an overview of China’s approach to agricultural production and imports and describes recent decades’ state support designed to balance supply security with commitments to liberalize its economy.
In the period following covid-19, AgIS said, China has been motivated by the war in Ukraine and tensions with the US to undertake a stockpiling effort that had favored row crops. According to AgIS, China currently accounts for 70.2 percent of global corn stocks; 62.4 percent of rice stocks; 50.3 percent of stored wheat and a 35.2 percent share of soybean stocks, despite accounting for just 18.1 percent of global population.
“The CCP has prioritized building standing inventories of essential grains and oilseeds and has yet to focus on doing the same for higher-value permanent crops. Thus, the global permanent cropland output prices and capital values have directly benefited from China’s domestic agricultural policies.”
Deals
Fidante and Proterra Asia get closer
Fidante and Proterra Investment Partners Asia formed a strategic partnership that will also see Fidante take a minority equity position in Proterra Asia. Financial details were undisclosed.
A subsidiary of Australian Securities Exchange-listed financial services provider Challenger Group Limited, Fidante specialises in linking the challenger global investor base with equity, fixed income and alternative asset managers.
Fidante and Proterra Asia began working together under the guise of a third-party distribution arrangement in 2020 when Proterra Asia was raising its Food Fund III. The vehicle closed on $200 million in October 2022.
“This prior relationship covered only Fund III whereas the expanded partnership covers all future fund raisings,” said Adam Brown, general manager and head of distribution Fidante EMEA.
Read the full story here.
New Forests acquires California asset
New Forests has acquired McCloud Forest, a 7,654ha asset in the Mount Shasta region of California. Financial details were undisclosed.
It is the first asset acquired by New Forests’ Forest Climate Solutions Fund, which focuses on combining returns from timberland alongside carbon credits developed and sold in the California-regulated carbon market.
McCloud Forest consists of mixed conifers including true fir, Douglas fir and ponderosa pine. New Forests forecasts the McCloud asset should generate significant income from the development of a carbon offset project under the California ARB compliance protocol.
This income, combined with the ongoing management of the asset for timber production, “is expected to provide attractive returns,” said a statement from the firm.
“We will be applying our sustainability approach to this asset, and over time intend to adjust harvest activities to allow trees to grow for longer, capture more carbon, and process a higher percentage of the wood into more sustainable solid wood products,” said Jeff Briggs, New Forests US managing director.
VC fundraising
Omeat, a California-based cultivated meat start-up, emerged from stealth and raised a $40 million funding round from S2G Ventures, GV, Bold Capital Partners, Tyson Ventures, Rethink Food, Trailhead Capital and Cavallo Ventures.
Bluu Seafood, a German biotech start-up producing cultivated fish, raised €16 million in a Series A funding round led by Sparkfood and LBBW VC, with participation from SeaX Ventures, Manta Ray Ventures, Norrsken VC and Delivery Hero.
Everytable, a California-based food company, raised $25 million in a funding round led by Dohmen Company Foundation through the Dohmen Impact Investment Fund, with participation from Creadev, Gullspång Re:foods and Kaiser Permanente Ventures.
SnapCalorie, a start-up developing food calorie approximation imaging tools, raised $2 million in a funding round backed by adAccel, Index Ventures, YC and Eric Roza.
Adamo Foods, a British developer of whole-cut steak made from mycelium, raised £1.5 million ($1.9 million; €1.75 million) from SFC Capital and Innovate UK.
Also in the news…
VCMI releases global rulebook for buyers of carbon offsets
Move comes ahead of potential intervention by regulatory agencies (Responsible Investor).
PE funds growth outpaces hedge funds
Private fund advisers represent just over 36 percent of all SEC-registered investment advisers (RCW).
Horizon founder on the challenges of investing in a warzone
Lenna Koszarny, chief executive of Ukraine-focused private equity firm Horizon Capital, says LPs are backing the firm’s latest fund now and are not waiting for the war to end (PEI).
World Bank fund, Sumitomo execute tokenized carbon credit trade through CAD Trust
The pair have conducted one of the first tokenized carbon credits using CAD Trust, which is built on the Chia blockchain (Carbon Pulse).
Stafford Capital hires sustainability investments raising head
The firm picked Valentina Abbott to help it gather more capital for its sustainable investment strategies (Secondaries Investor).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp
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