First look
Lebanon and Iraq: Where food delivery can provide an ROI
Agri Investor has taken a closer look at Toters, a Lebanese ‘super app’ that started out delivering Starbucks and Pinkberry drinks in 2017 and now has its own dark grocery stores, partnerships with more than 4,000 goods and service providers, and is adding financial services.
The e-grocery segment to which the start-up belongs – which comprises online stores and the last-mile delivery start-ups that sprung up to deliver their products – has had a bruising two years as fundraising ballooned to $19 billion in 2021, before crashing back down to $5.1 billion in 2022 – the same figure raised in 2020.
Within these numbers are the stories of companies such as Buyk, Bother, Fridge No More and Zero Grocery, all of which have collapsed. Meanwhile, others such as Fancy, Dija, Postmates, Grubhub and numerous others have been acquired by larger and more mature incumbents such as Uber, Gopuff and DoorDash.
Toters, meanwhile, which operates across Beirut and 10 Iraqi cities, has managed to layer up its offering and improve its value proposition, such that the company is now operating profitably, co-founder and CEO Tamim Khalfa tells Agri Investor in our case study.
Lebanon has been in the grip of a financial crisis since 2019 that has crippled its financial system, while the US-led invasion of Iraq in 2003 has had a similarly paralyzing impact on Toters second market. Both are now cash-based economies where card transactions are rare, and US dollars continue to be legal tender.
The start-up has been able to use its unique circumstances to its advantage, such as the massively underserved consumer market, cheap labour for a courier fleet, and the lack of established multinational corporations.
Khalfa declined to share operating figures but confirmed the company now bills “hundreds of millions of US dollars per year.”
Next on the agenda is balancing its desire to capture the growth potential it sees in Iraq, while demonstrating it can do so sustainably.
Read the full article here.
They said it
“As it is, the EU SF framework focuses on avoiding negative social impacts without giving any guidance on how sustainable investments could positively contribute to social goals”
A group of European financial institutions and industry associations have called on the European Commission to put a social investment framework on its agenda.
Fundraising
Paine Schwartz benefits from scaled LP support
The sixth iteration of Paine Schwartz Partners’ flagship agribusiness fund benefited from a larger portion of LPs drawing from real asset and impact investing allocations as they scaled their support for the fund.
Chief executive Kevin Schwartz told Agri Investor that there was no clear pattern in the relationship between investor type and the buckets from which they drew to back Food Chain VI, but the percentage drawing from general private equity allocations was lower than in previous vehicles.
“The real asset strategies that are investing with us typically have a focus on natural resources and/or food and agriculture directly, and they are seeking high-turn potential exposure to the segment,” he explained. “We tend to be the high-return potential strategy in which those types of sector-focused, sector-aware investors deploy capital.”
Paine Schwartz closed Food Chain Fund VI on $1.7 billion in September, surpassing its $1.5 billion target through commitments from a combination of pension and sovereign wealth funds; family offices, foundations, endowments and “other institutional investors.”
The firm already had line of sight to more than $1 billion at the time of its August first close and had secured all of that capital by December, Schwartz said.
That early fundraising momentum was helped, he added, by developments in other markets like healthcare and software that had previously overperformed and more recently served to highlight food and ag’s resilience and downside protection.
“When you overlay the current market fundraising dynamics, we are super appreciative for the scaling support we received from existing LPs and the high-quality new investors, which actually were predominately from the US,” Schwartz said.
Read the full story here.
Timberland
PE looks for its forestry ‘social license’ as protestors move in
Some 75 demonstrators camped outside the Who Will Own the Forest? conference to protest private ownership and management of forest resources.
Their presence provided a unifying theme to discussions at the Portland event and helped center what Andriy Hrytsyuk – a forestland investment manager with IKEA affiliate INGKA Investments – labeled the “increased demand for social license,” which he said is a key trend shaping the market’s future.
President and chief executive of the American Forest Resource Council, Travis Joseph, added: “Those people outside, those protesters, they’re not irrelevant. They really are highlighting what’s happening right now in the policy and communications space. Their sign out there on the firetruck says something like ‘Profits over the planet’. That’s their story. They are labeling you.
“What we ought to do as a sector is take that space back. We’re ceding the space by saying: ‘You’re the environmentalist and we’re just the companies that want to reap the profits off of cutting down trees’. We’re going to lose that fight and that’s not true. Our sector is about sustainably managing these resources for society and we should lean into that space.”
Ahead of the event, local press carried reports that said a group unrelated to those demonstrating outside the venue – although they would have their own moment of protest at the conclusion of the conference – had smashed windows at the forestry center, leading to doors and windows being boarded up.
The conference attracted around 400 people and discussion was united by a theme of opportunities and challenges stemming from new entrants and interest in timberland.
Other panels included discussion around the impact of AI on timberland management and valuation; recent developments in fire risk insurance premiums, and difficulties in hiring both skilled and unskilled labor.
Read the full article here.
Sustainability
Inside Cibus Capital’s ‘wild’ berry farm
Cibus Capital carved out 230ha from berry producer Hall Hunter Partners to create The Summer Berry Company in 2019.
The business spans farmland in the UK and Portugal, and last year produced approximately 13,000 tons of strawberries, raspberries, blueberries and blackberries.
At the time of the acquisition, Cibus COO Jeremy Alun-Jones was keen to praise The Summer Berry Company’s “sustainable approach and investment in new technologies”. It is a legacy the firm has been keen to maintain, having implemented a range of new measures designed to make the company more sustainable as well as boost value since taking ownership.
Cibus invited affiliate title New Private Markets down to the West Sussex site to see these changes firsthand.
The Summer Berry Company has moved away from chemical pesticides in favour of an ecosystem approach that keeps harmful insects in check naturally.
Resource use has been managed through energy contracts that favour renewable producers, while a large reservoir now sits on the site to help it manage water use, while a fleet of 50 robots have also been added to pick strawberries to complement human labor and improve worker welfare.
“I strongly believe an investor at the exit of Cibus might be willing to pay a higher multiple for the company when you are not selling to an aggregator, but you’re selling to a retailer,” said Summer Berry Company CEO David Sanclement.
Read the full story here.
For sale
Cattle in Australia’s north…
In one of the larger land sale listings in recent times, the Hui family of China has placed its Kimberley Cattle Portfolio up for sale.
Covering more than 2.9 million ha over seven pastoral leases (comprising 1,828,692ha) and five sub-leases (924,325ha), as well as an agistment agreement across 153,475ha, the portfolio is located entirely within a 220 mile radius in Western Australia’s Kimberley region.
Portfolio general manager Haydn Sale said the asset was “unique” because it is a pastoral operation with the ability to breed weaner and feeder cattle, but that could move to a feedyard production model with further investment.
Danny Thomas, senior director at LAWD and overseeing the sale process, said: “This aggregation is special in that you can breed, background and finish, and the owners have done an excellent job in putting together a significant landholding that can be run as a single entity, including irrigated land to finish stock. It is very rare to find a property in the region at this scale that can so easily pivot between live export to the north and the southern markets.”
The assets are owned by Archstone Investment Group, the family office of Hong Kong-based Hui Wing Mau. Expressions of interest close on November 9.
…to sheep and cropping in the south
Also placed on the market in recent weeks was Australian Food and Agriculture, the enormous portfolio of 13 farms across three hubs near Coonamble, Deniliquin and Hay in New South Wales.
The company’s assets cover more than 225,000ha and include more than 54,000ML of water licenses in the Murray-Darling Basin. Among its assets are the well-known merino studs Wanganella, which celebrated its 150th anniversary in 2011, and Poll Boonoke, established in 1934. Both are famed for their role in the development of Australia’s merino breed.
As well as livestock, the portfolio has around 11,000ha of irrigated cropping land, as well as further dryland cropping land.
The portfolio was offered to the market in 2017 for around A$330 million ($189 million; €180 million) but a sale did not eventuate – a report in Beef Central suggested it could fetch as much as A$700 million this time around.
The sale is being handled by Bell Potter, on behalf of the Bell family; Bell Financial Group managing director Alistair Provan; and Ray Dalio, founder of US hedge fund Bridgewater Associates.
VC fundraising
BlueNalu, a California-based cultured fish start-up, raised $33.5 million in a Series B funding round backed by Agronomics and other new and existing investors.
Orbem, a German start-up that has developed an MRI scanner for chicken eggs, raised a €30 million Series A funding round led by 83North, with participation from La Famiglia, The Venture Collective and Possible Ventures.
Bon Vivant, a French precision fermentation start-up, raised €15 million in a seed round led by Sofinnova Partners, Sparkfood and Captech.
Wanda Fish Technologies, an Israeli cultivated fish start-up, raised $7 million in a seed funding round led by Aqua-Spark, with participation from The Kitchen Hub, Peregrine Ventures, PICO Venture Partners, MoreVC and CPT Capital.
Also in the news…
Australian farmland value gains may be starting to moderate
Evidence from ANREV and Growth Farms suggests that growth in Australian farmland values may flatten or at least moderate over the next few years (Agri Investor).
APG, PPF and UniSuper team up to acquire Tasmanian forestry asset from New Forests
APG’s Ben Avery said the asset was a ‘very high-quality plantation forestry resource’ with significant potential to increase carbon sequestration (Agri Investor).
Mood shifts in the bush as farmland’s long run peters out
Australian farmland, like all sectors of investment real estate, is being repriced (AFR).
Ronin Equity seeks add-ons after merging six companies to craft Lotus
Ronin formed Lotus Beverage Alliance in April when the PE firm merged six craft beverage equipment providers (PE Hub).
Steve Schwarzman’s top tips for investing in a volatile market
The Blackstone chief executive shares five pieces of advice – including his 10% rule when it comes to valuations – with Private Equity International (PEI).
Red, juicy, heat resistant: the hunt for a climate-proof apple
It is the first fruit of the Hot Climate Partnership, a collaboration between scientists and growers in Spain and New Zealand (FT).
European private equity-backed M&A drops to three-year low
For the first nine months of 2023, European PE-backed M&A declined 57 percent compared to last year (PE Hub Europe).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp
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