Goldman takes majority stake in new 3,000-acre tree fruit company

The deal is the first initiated and supported by London-headquartered NewAg Partners, the boutique advisory founded by former Insight Investment executive Detlef Schoen.

Goldman Sachs Asset Management made a strategic investment of an undisclosed size into Washington-headquartered New Columbia Fruit Packers as part of a merger initiated and supported by NewAg Partners.

London-headquartered NewAg Partners, an agribusiness and regenerative farming boutique, announced last week the merger between Yakima-headquartered Frosty Packing and Columbia Fruit Packers, which is headquartered in Wenatchee, Washington. The combined company has 3,000 acres of apple and cherry orchards, two apple-picking facilities and one cherry picking facility and will operate as New Columbia Fruit Packers.

The deal is the first NewAg has been involved with since its founding in 2019 and chief executive Detlef Schoen told Agri Investor it came after he and his team decided to focus on the Pacific Northwest tree fruit industry about two years ago.

“Initially, when we set out, we said, why don’t we raise a fund, as you do, and then we have covid and people getting nervous. So, we said let’s pivot out of that strategy and bring our pipeline to market,” explained Schoen, whose previous experience includes ag-related positions with Aquilla Capital Farms, Nidera and Cargill, according to his LinkedIn profile.

He said that after an informal process limited to discussions with about half a dozen investors, NewAg reached an agreement with Goldman Sachs that is focused on US tree crops. Goldman, which declined to comment, is investing in New Columbia through a unit of its sustainable investing practice and has acquired a majority stake in the new business.

Schoen highlighted that the merger to create New Columbia comes against a backdrop of steadily building institutional activity in the Pacific Northwest that has included investments by Sixth Street Agriculture, Cottonwood Ag Management, Hancock, Fiera Comox, International Farming Corporation, the Ontario Teachers’ Pension Plan and others.

Among the key factors driving the opportunities for private capital in the Pacific Northwest, according to Schoen, are farmer demographics and the inability of banks to provide support for the kind of $100 million transactions typically pursued by large family farming operations.

“You have a lot of overaged, obsolete orchards. You have a lot of packing houses that are subscale where you need consolidation, automation and mechanization, both in the orchards and the packing houses,” he said of the PNW. “There needs to be a massive transformation getting this whole industry from the 1960s or 1970s where it is currently stuck to a large degree, into today’s cutting edge.”

In the statement announcing the deal, NewAg said New Columbia Fruit Packers plans to substantially increase production of apples and cherries through investment and acquisitions

“To really make sense, they need to at least double their footprint in Washington State, preferably treble or quadruple in order to consolidate this to a level where you are shifting the power dynamics vis-à-vis WalMart and Kroeger and so on,” Schoen said.

More broadly across markets, he added, connections between agriculture and climate change that began to resonate with certain investors around 2018 is starting to be appreciated by a wider variety of LPs.

“Ten or 15 years ago, you were struggling to get a billion in the ground. In the last two years, I’ve seen one $800 million deal, another $800 million deal, a $400 million deal, a $300 million deal,” he said. “Clearly, there is a black hole sucking capital into the global agriculture industry, so all of a sudden you can deploy the kinds of ticket prices that these large institutions need to be able to deploy to justify getting out of bed.”