First look
Paine Schwartz strikes A$1.5bn deal for Costa Group
Costa Group has accepted Paine Schwartz Partners’ revised offer of A$1.5 billion ($966 million; €908 million) to acquire the remaining shares in the business that it does not already own.
Paine Schwartz initially made a non-binding all-cash offer of A$3.50 per share on May 31, but this was revised down on September 18 to A$3.20 per share following a “deterioration in the outlook” announcement from Costa Group on August 24.
Costa Group said in the statement that it would see a “deterioration in the outlook for later-season quality across our citrus category,” which was estimated to have a negative impact of around A$30 million on full-year EBITDA-S (stock-based compensation).
This was attributed to weather impacts that have led to lower production volumes in southern regions of Australia and an overhang from La Niña climatic conditions contributing to smaller-than-expected fruit sizes.
Paine Schwartz’s previous offer valued the business at A$1.6 billion. The New York-based firm is acting alongside Driscoll’s and British Columbia Investment Management Corporation to make the acquisition.
Costa Group chairman Neil Chatfield said in a statement: “The board is committed at all times to acting in the best interests of shareholders and with this firmly in mind, carefully considered a range of factors in arriving at its recommendation.
“This included a number of different valuation scenarios, potential risks relating to the future execution of Costa’s business growth plan, and the price at which Costa shares could trade over the medium to longer term if it continues as an independent listed company.
Costa operates more than 7,200ha of planted farmland, 40ha of glasshouse facilities and three mushroom-growing facilities, as well as majority-owned joint ventures operating six blueberry farms in Morocco and four berry farms in China.
Read the full story here.
They said it
“There is significantly more interest from institutional capital broadly and impact capital specifically around genetics and the breeding and licensing segment of the food and ag value chain”
Paine Schwartz Partners chief executive and managing partner Kevin Schwartz discusses the rationale for its investment into Bloom Fresh International
Fundraising
Astanor Ventures hits €360m close
Impact investor Astanor Ventures has closed its second flagship vehicle on €360 million, exceeding its €350 million target.
Astanor Ventures II was launched in December 2021 and a large part of the vehicle’s fundraising took place last year, partner Christina Ulardic told Agri Investor.
The strategy for the venture capital fund is largely unchanged from its predecessor and will mainly target Series A and B-stage food value chain companies that are trying to solve social and environmental issues.
“The world came to a standstill in 2022 for a while, but then the adjustment to a ‘new normal’ arrived, which hopefully will not actually remain the new normal, and then there was momentum again later in that year,” said Ulardic.
“A lot of our Fund I LPs, many of them actually returned and reinvested into Fund II. They saw that this is not a small sector fund but is like a big platform play where things actually have to change. The reception has been very positive.”
Ulardic added that while there has been some correction in the market with regard to valuations at the growth stage following the 2022 downturn, early-stage companies with good fundamentals have experienced minimal adjustment.
One of the knock-on effects of macroeconomics that is impacting early stage companies is a desire to have fewer funding rounds, which in turn has slowed the pace at which capital can be deployed.
Read the full story here.
Lowercarbon Capital takes $550m
Lowercarbon Capital has raised $550 million across two venture capital climate vehicles. The capital split between the two funds was not disclosed.
Managing partner and co-founder Chris Sacca said the vehicles “were oversubscribed by multiple times before we sent out the fundraising letter,” in an unorthodox announcement on the firm’s website.
Lowercarbon Capital invests across the areas it views as most in need of climate finance, which includes energy, building materials, food, forestry, industrial chemicals and transportation.
The firm’s two previous funds have invested in agtech start-ups such as kelp farming business Running Tide, cultivated meat producer Mosa Meat, fermented oil producer Zero Acre Farms and sustainable dairy start-up Formo, among others.
The capital raise takes the firm to more than $2 billion in assets under management. Since it was founded in 2018, Lowercarbon Capital has backed more than 130 start-ups across its climate-focused strategies.
Read the full story here.
Indigo Ag brings in $250m
Indigo Ag has completed a $250 million funding round to support the expansion of its operations, which are broken down into the three verticals of carbon farming, biological inputs products and a grains transaction platform.
The round was led by Flagship Pioneering and received support from existing and new investors including the State of Michigan Retirement System and Lingotto Investment Management, which is a $3 billion investment management fund owned by diversified holding company Exor.
A statement from Indigo Ag said the company has “entered a period of acceleration” across its operations.
The company said net revenues for 2022 grew 40 percent year-over-year and revenues for the first seven months of 2023 grew 90 percent in comparison with the same period in 2022.
Indigo Ag also confirmed it has produced 133,000 agricultural carbon credits to date and its fourth carbon harvest shows “continued growth in both farmer and acreage participation.”
Deals
OTPP takes A$600m GreenColler ownership stake
Ontario Teachers’ Pension Plan will use its investment in carbon project specialist GreenCollar to “explore opportunities to generate value” within its wider agriculture and timber portfolio, after agreeing a deal to acquire KKR’s 49 percent stake in the business.
OTPP first invested in GreenCollar in March 2022, when KKR sold down a portion of its majority ownership stake. The Canadian investor has now acquired the rest of KKR’s ownership interest, with GreenCollar CEO and co-founder James Schultz set to continue leading the business and remain a significant minority shareholder.
The terms of the deal were not disclosed but a source close the deal told Agri Investor that the transaction was valued at around A$600 million. OTPP declined to comment on the specifics of the deal.
OTPP will seek to lean on synergies between GreenCollar’s work and its own extensive portfolio of farmland and forestry assets, Christopher Metrakos told Agri Investor, who is senior managing director, natural resources at the pension.
“We have already had several key discussions and are working on initiatives in carbon and biodiversity on some of our platforms. Moving forward, we believe that having detailed insight into value-add opportunities through the monetization of environmental attributes on potential agriculture and timberland investments will give us an edge in Australia and globally.”
“Agriculture and timberland are unique in the sense that they can be net sources of emissions through poor management practices or net sources of sequestration through more sustainable land management practices. We believe that market-based solutions to encourage these sustainable management practices are critical,” he said.
Read the full story here.
Blue Road Capital acquires NatureSweet
Blue Road Capital has acquired greenhouse vegetable grower NatureSweet from growth equity venture capital firm Silver Ventures. Financial details were undisclosed.
NatureSweet grows tomatoes, peppers and cucumbers across five greenhouses in Mexico, which are supported by the company’s in-house packaging facilities.
New York-based Blue Road Capital is exclusively focused on investments in food, beverage and agribusiness companies. Its strategy focuses on companies in North and South America, and it makes an average investment per transaction of $75 million or more, according to its website.
The firm is in market seeking to raise $750 million for its second flagship vehicle, which had taken at least $400 million by June 2021.
Read the full story here.
Natural capital
REDD+ under fire again
A report published last week by the Berkeley Carbon Trading Project, part of the Goldman School of Public Policy at the University of California, Berkeley, has revealed what it calls “critical shortcomings” with REDD+ carbon credits.
The report questioned the effectiveness of REDD+ projects and concluded that “REDD+ is ill-suited for carbon crediting” for three key reasons.
First, the team of 14 researchers found that REDD+ carbon credits represent a small fraction of their claimed climate benefit, with emissions reduction estimates exaggerated. Second, the team found that some REDD+ projects have led to displacement or other harm to vulnerable communities, despite the safeguards that are supposed to be in place.
And third, the research found that projects suffer from a conflict of interest, whereby auditors hired by developers regularly fail to enforce the rules of the program, the appropriateness of carbon crediting assumptions, and safeguard protections.
This is further fuel to fire for critics of the REDD+ program – and the team of researchers called for a “systemic shift in approach” that could realign the scheme with its original stated goals of reducing deforestation and emissions.
Read the full report here.
TNFD takes another step
The Taskforce on Nature-Related Financial Disclosures has reached a significant milestone, publishing its final set of 14 recommended disclosures alongside a range of implementation guidance at an event in New York City last week, following two years of consultation.
Most of the recommendations align closely to the existing recommendations set out by the Taskforce on Climate-Related Financial Disclosures and share the same four pillars: governance, strategy, risk and impact management, and metrics and targets.
The new TNFD recommendations focus on nature and biodiversity-related impacts and risks, with the TNFD to track voluntary market adoption of these through an annual report that will begin in 2024 – as the TCFD already does for its recommendations.
Several asset managers, especially those with an impact investment focus, have been awaiting the recommendations in the hope that it could act as a tailwind behind further interest in the natural capital asset class.
David Craig, co-chair of the TNFD and founder and former CEO of Refinitiv, said in a statement: “Nature loss is accelerating, and businesses today are inadequately accounting for nature-related dependencies, impacts, risks and opportunities. Nature-risk is sitting in company cashflows and capital portfolios today. The costs of inaction are mounting quickly. Businesses and financial institutions now have the tools they need to take action.”
Read the full announcement here.
VC fundraising
Pure Harvest, a UAE-based indoor farming start-up, signed a three-year $150 million partnership with Richel Group to support the design and construction of smart farms across the Middle East and Asia.
JOKR, a Luxembourg-based online grocery delivery company, raised a $50 million Series D funding round led by Convivialité Ventures, with participation from Lombard Odier, G Squared, GGV, Balderton Capital, Monashees, Greycroft and Tiger Global Management.
Plan A, a Berlin-based carbon accounting and ESG reporting platform, raised $27 million in a Series A funding round led by Lightspeed Venture partners, with participation from Visa, Deutsche Bank and BNP Paribas’ VC arm Opera Tech Ventures.
Complete Farmer, a Ghanaian start-up that supports farmers throughout their operations, has raised a $10.4 million pre-Series A funding round co-led by Acumen Resilient Agriculture Fund and Alitheia Capital. The round was also backed by Proparco, Newton Partners via the DP World Venture Fund and VestedWorld Rising Star Fund.
Pure Space, a South Korean food waste prevention start-up, raised $4 million in a Series A funding round.
Superorder, a US-based platform for restaurant management, raised $10 million in a funding round led by Foundation Capital, with participation from Y Combinator managing director Michael Seibel, Cruise co-founders Kyle Vogt and Daniel Kan, I2BF Global Ventures and others.
Treetoscope, an Israeli water management software provider for farmers, raised $7 million in a seed funding round led by Champel Capital, with participation from GlenRock Fund, SeedIL and YYM-Ventures.
Agrematch, an Israel biostimulants and plant nutrition discovery start-up, received an investment of an undisclosed size from multinational chemicals products company ICL Group.
Also in the news…
Nàdarra raises C$20m for inaugural sustainable biotech fund
The founding investors were Farm Credit Canada, Natural Products Canada and several Canadian family offices (VCJ).
Humble Growth closes $312m growth equity fund for disruptive CPG brands
The firm will invest $10 million to $40 million in food, beverage, health, beauty, vitamins, supplements, and apparel companies (AgFunder).
McWin Capital Partners to buy majority stake in Big Mamma
Restaurant group Big Mamma will leverage the partnership with McWin to expand from Europe to the Middle East and US (PE Hub Europe).
Instacart’s IPO surges
The grocery delivery company’s shares priced at $30 per share hit a peak of $42.95 in the first few minutes of trading Tuesday (AP News).
AeroFarms emerges from bankruptcy, names new CEO
The company also announced it is halting spending on R&D projects that do not contribute to the ramp-up of its flagship Danville Farm location (Winsight Grocery Business).
Rainforest carbon credit schemes misleading and ineffective, finds report
System not fit for carbon offsetting, puts Indigenous communities at risk and should be replaced with new approach, say researchers (Guardian).
Statement to voluntary carbon market stakeholders on the latest Guardian attack
The Guardian has gone dangerously off track when it comes to reporting on the voluntary carbon market (Verra).
‘Declaration of regulatory bankruptcy’ – mixed opinions on EC’s SFDR review
Market participants welcome possible fixes to SFDR woes, but prospect of further compliance changes prompts increasing frustration (RI).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp.
9/26/23: This article has been amended to reflect the value of the GreenCollar deal was A$600 million, not C$600 million.
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