Italian ag fund backs chestnut leader in bid to build transformed-fruit platform

FAI has already deployed 60% of capital raised at first close as it progresses towards its €50m fundraising target.

Fondo Agroalimentare Italiano I has acquired a minority stake in Agrimola, Italy’s largest chestnut maker, as a first step towards building a European transformed-fruit champion.

The deal is the third sealed by Unigrains-managed FAI, which reached a first close on €40 million in June. The fund, which was backed by 10 limited partners when it passed that milestone, has not yet sealed a second close but is in advanced discussions with two potential investors, its investment director Francesco Orazi told Agri Investor.

FAI has a €50 million target and a €70 million hard-cap. It has already deployed about 60 percent of the equity raised at first close, Orazi said, providing a good basis for going back to soliciting LP commitments after a summer largely dedicated to building the deal pipeline. He added that the fund has already signed its fourth deal, and that two more are under consideration.

Founded in 1978, Agrimola is Italy’s largest manufacturer, processor and marketer of fresh and canned chestnuts, producing about 20,000 tons a year. It also has a solid footprint outside its home market – notably in Germany, France, Switzerland and Northern Europe, according to Orazi.

The company’s influential position across the region owes to the quality of its products, which is partly rooted in recent history, Orazi explained. When a moth outbreak spread across Europe earlier this decade that caused many chestnut trees to die, most countries turned to European-Japanese hybrids. However, Italy stuck to the original species, which Orazi argued produces higher quality chestnuts. Agrimola is the largest producer of this species.

Growing basket

Agrimola’s largest source of growth, however, lies in a more recent focus: fruit transformation. Orazi sees a big opportunity for consolidation in the sector, which he describes as “fragmented.”

That is notably the case in Italy, he said, where the sector largely consists of companies with annual sales of just €5 million to €10 million that specialize in one or two types of fruit. The rationale for investing in Agrimola was that it presented an opportunity to make it a platform for further integration of the sector – a vision shared by Luca Sassi, Agrimola’s chief executive and majority shareholder.

Orazi said FAI’s investment in Agrimola was signed at the end of July, but the deal is only being announced now because its sponsors wanted to make progress on a first potential acquisition target for the business, which is now being considered.

Overall, Agrimola handles about 40,000 tons of fruits annually, half of which are chestnuts, allowing it to post sales of more than €36 million. About 40 percent of its revenue comes from exports.

FAI’s largest sponsor is France’s Unigrains, which committed €25 million to the vehicle prior to first close. Of the others, nearly two-thirds are foreign investors, including French and Swiss institutions, with an Italian family office and two entrepreneurs accounting for the balance.

The 10-year fund targets gross IRRs of 20 percent. It is managed by a subsidiary of Unigrains and run by the team tasked with launching the agribusiness private equity fund of French bank Crédit Agricole in 2009.

The fund’s other assets include Trasporti Romagna, a logistics and transport business with more than €125 million in sales that was acquired several years ago, and Sfoglia Torino, a snack maker bought in 2017 that generated more than €27 million in turnover last year.