First look
Verde Farms eyes distribution, distribution, distribution
Pasture-raised beef business Verde Farms has been on a near 20-year journey to get its products in front of US consumers across the country.
Having founded the business in 2005, a time when retail buyers “didn’t even want to hear the conversation, never mind be educated” on the benefits of pasture-raised beef, says founder and CEO Dana Ehrlich, its market penetration began to accelerate in 2009 when it signed distribution deals with Wegmans and Costco.
A $15 million minority equity investment from Manna Tree Partners followed in February 2020, which enabled it to pursue higher margins by bringing some of its production in-house and growing its share of branded products.
“Everyone has a busy life and they don’t have time to research every aspect of every supply chain, of every product they buy,” says Ehrlich. “This is what makes the value of a brand even more important as a shortcut for the consumer who is trying to do the right thing.
“Looking ahead it’s really just distribution, distribution, distribution. When we do gain distribution, we have the highest velocities in our sector and we also have the largest shopping baskets. So, retailers recognize that we’re bringing in the most valuable shoppers. When they come in for meat they pick up lots of other stuff like organic milk and organic eggs.”
In the long-term, the organic and regenerative ag certified business may well look to emulate the success of former Manna Tree Partners portfolio company Vital Farms, which had a successful IPO in August 2020.
Vital Farms returned 4x invested capital and a net IRR of 80 percent in gross terms, as it proved out the firm’s strategy of investing in niche food businesses that place a strong emphasis on sustainability and nutritional value – the same vertical in which Verde Farms sits.
Read the full case study here.
They said it
“I don’t think prices are going to plateau, I think they are going to collapse in terms of land prices; we are seeing it already”
goFarm founder Liam Lenaghan offers his thoughts (paywall) on the direction Australian farmland prices will take.
Timberland
Timberland offers a path to net zero
Agri Investor’s timberland special report has landed and there is plenty to delve into.
As well as expert commentary from Manulife Investment Management and Nuveen Natural Capital, the report looks at the many reasons why LPs, asset managers, corporates and governments are queuing up for a share of forestry.
“We are interested in both the conservation pure plays, financed by carbon credits or other payments for ecosystem services that may emerge over time, and greenfield timber plantations that would have set aside components as well, where you would restore natural ecosystems,” says Adam Gibbon, natural capital lead at AXA IM Alts.
AXA IM Alts has backed Brazilian firm Mombak’s strategy, which is exclusively focused on restoration in the Amazon and has committed to never harvesting the trees it plants.
“We are only anticipating one revenue stream [from Mombak] and that is from the sale of voluntary carbon credits,” says Gibbon.
In another article in the report, Robert Guest, co-lead at natural capital and timberland investor Foresight Sustainable Forestry, considers the numerous industries and actors developing a reliance on forestry and its products.
“Timber is a carbon-efficient and renewable raw material that will play an important role in every country’s natural capital economy with a broad range of services delivered – timber, carbon sequestration, biodiversity, positive social and economic contributions to jobs, public health, education and recreation,” says Guest.
Read the full timberland report here.
Deals
Warakirri adds two vineyards to Diversified Agriculture Fund
Warakirri Asset Management has added two assets to its Diversified Agriculture Fund portfolio, taking the fund’s assets under management past A$140 million ($91 million; €85 million).
The firm has acquired two established vineyards in Western Australia for A$22 million on a sale-and-leaseback basis. The agreed lease is for 15 years with Margaret River Wine Production, which is part of the Fogarty Wine Group.
The assets – Amadeus Vineyard and Smithbrook Estate – are located in the Margaret River and Pemberton regions, respectively. The vineyards are used to produce premium grapes for several wine brands owned by the Fogarty Wine Group.
The acquisitions represent the seventh and eighth assets in the Diversified Agriculture Fund, which crossed A$100 million in AUM earlier this year with the purchase of an almond orchard in northwest Victoria in a A$32 million off-market deal.
Read the full story here.
Equilibrium and US pension back Butterfly’s aquaculture business
Butterfly Equity portfolio company Pacifico Aquaculture has secured an equity investment of an undisclosed size from a consortium led by Butterfly and an unnamed US pension fund.
Pacifico, based in Ensenada, Mexico, also secured a loan from Equilibrium Capital‘s controlled environment foods fund – the size of which was also undisclosed – to support construction of a 20,000 metric ton striped bass nursery in Baja California. Construction of the facility is expected to take more than two years.
Butterfly co-founder and co-chief executive Dustin Beck told Agri Investor that the pension investor is among the LPs in the firm’s existing vehicles.
“We have a really strong network across US pensions,” he said. “A lot of these pensions have a lot of early-stage investments in the technology industry and a couple of them are looking to diversify into some really exciting, growing assets within the food sector in particular just because of the stability and long-term trends.”
Pacifico plans to build a nursery facility equipped with a recirculating aquaculture system supplied by Billund Aquaculture, a recirculating fish farm design and implementation specialist headquartered in Denmark.
Read the full story here.
Culligan to acquire Primo Water’s European business
BDT Capital Partners’ consumer water services business Culligan International has agreed a deal to acquire Primo Water Corporation’s European business in a $575 million deal.
Primo Water said “the transaction excludes the Aimia Foods UK, Portugal and Israel businesses but each of these will sold across 2024.”
The deal represents a premium valuation multiple of approximately 11x adjusted EBITDA based on the trailing 12 months ended July 1, 2023.
“The transaction was the result of a proactive board-led process that resulted in an agreement that offers an attractive premium valuation for a significant portion of our international businesses and simplifies and focuses Primo Water on our core North American water business,” said Primo Water chief executive Tom Harrington.
MidEuropa exits Profi Rom Food in €1.3bn deal
Private equity firm MidEuropa agreed a €1.3 billion deal with Ahold Delhaize to sell its Romanian retail food business Profi Rom Food.
Profi has more than 1,600 stores across the country and generated revenue of more than €2.5 billion in the 12 months ending June 2023, according to a statement.
MidEuropa acquired the business in 2017 and grew the business by adding more than 1,100 store locations and increasing sales by more than 3.3x.
“The sale to Ahold Delhaize validates the clear strategic value we have added to Profi and represents yet another milestone for MidEuropa as we once again deliver attractive returns and significant liquidity to our investors,” said MidEuropa managing partner Robert Knorr.
Debt
Avante backs Uncle John’s with debt and equity investment
Avante Capital Partners has made a first lien debt and minority equity investment in Florida-based smoked sausage and meats business Uncle John’s Pride.
The firm took the step to support a growth investment in Uncle John’s by Promise Holdings, which is a minority- and women-owned private holding and investment company that invests in and operates early- and late-stage businesses in the food, fashion and beauty and leisure industries.
Private credit and structured equity firm Avante Capital is also a women- and minority-owned asset management firm.
Uncle John’s offers a variety of fresh and smoked sausages through retail and foodservice channels. Its portfolio features brand-named products such as Bean Brothers, Garcia Brand, Peppino Foods, Realtree and Zummo Meat.
Avante Capital closed its third flagship vehicle on $450 million in September 2022, surpassing its $300 million target and initial $400 million hard-cap.
At the time, managing partner Ivelisse Simon told affiliate title Private Debt Investor: “We could have raised $700 million, perhaps $800 million. But that would not have been the optimal size. We wanted to be able to make use of this money.”
Read the full story here.
People
Nuveen hires Nick Moss as head of nature-based solutions
Nuveen Natural Capital has hired Nick Moss, a London-based executive with experience in sustainability and fund management, as head of nature-based solutions.
Moss will focus on an investment strategy that includes farmland, forestry and ecological restoration. He will report to global head of asset management Skye Macpherson in a role that also includes responsibility for reducing emissions and environmental footprint of commercial production processes and implementing steps to protect and restore existing or damaged animal habitats.
In a statement, Macpherson highlighted Moss’s strong network among businesses, donors, governments and developmental finance institutions.
“He will play a pivotal role in continuing to grow our natural capital and nature-based solutions offering, and providing the technical expertise to manage our holdings efficiently, sustainably and to the highest standards,” she said.
Read the full story here.
VC fundraising
Talus Renewables, a New York-based renewable energy green ammonia developer, closed a $22 million Series A funding round co-led by Material Impact and Xora Innovation, a Temasek investment platform, with participation from Cavallo Ventures and Rice Investment Group.
Letoon Holding, a British vegetable waste start-up, secured a £20 million ($24 million; €23 million) growth equity investment from Nimbus Capital.
Aigen, a Washington-based developer of solar powered autonomous crop management robots, raised a $12 million Series A funding round backed by ReGen Ventures, New Enterprise Associates, Cleveland Ave, Incite and Susquehanna Private Equity Investments.
Dreamfarm, an Italian vegan cheese start-up, raised €5 million in a pre-seed funding round with backing from Hi-Food and entrepreneurs Giampaolo Cagnin and Francesco Mutti, the owner and CEO of the Mutti Group.
Nūmi, a French cultivated breast milk start-up, raised a €3 million pre-seed funding round with backing from Heartcore Capital, HCVC, Financière Saint-James, Kima Ventures and Kost Capital.
Also in the news…
Decarbonization drive draws capital to the agri-infra nexus
A revaluation of what constitutes an infra asset and the need to build a low carbon global economy are pulling energy transition and project finance capital pools towards ag (Agri Investor).
CalPERS plans raft of climate measures including $100bn for climate solutions
Peter Cashion, managing investment director for sustainable investments, will present the plan, which includes another $53 billion for climate solutions investments, 10 more sustainability staff, scenarios analyses and options for divestment (New Private Markets [registration required]).
EU farmers should pay for their carbon emissions, says Denmark
Climate minister steps up calls to bring agriculture under bloc’s CO2 trading system (Financial Times [paywall]).
Barbados ‘debt-for-climate’ swap backed by $300m EIB, IADB guarantee
The European Investment Bank and Inter-American Development Bank are providing a $300 million guarantee for Barbados to execute a “debt-for-climate” swap to upgrade water infrastructure (Reuters).
Russia, China expand agricultural trade
Forging stronger political ties, Russia and China also are expanding agricultural trade, promising changes for the global grain market (World Grain).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp.
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