The investor make-up of Manna Tree Partners‘ debut fund was a key factor in the asset manager’s decision to place a $15 million growth capital investment into Verde Farms, said the firm’s chief operating officer.
“Investing is a unique thing. You always want to marry peoples’ interests – both on the financial side and their curiosities – together,” Brent Drever said, speaking to Agri Investor soon after last week’s investment into the grass-fed, organic beef producer.
“There are groups that we engage with that are in our LP base that have distribution channels outside of North America that are looking for assets like this [Verde], to feed the channels that they are engaged with,” Drever added, before declining to provide more details about any specific investors.
More than half of the LPs in Manna Tree Partners Fund I are family offices with some existing connection to food and agriculture, Drever said.
The acquisition of a minority stake in Verde is the fourth investment for Vail, Colorado-headquartered Manna Tree, which was founded in 2018 by a group of stakeholders that included Gabrielle Rubenstein, daughter of Carlyle Group founder David Rubenstein.
Manna Tree’s strategy focuses on healthy foods and development of related supply chains. Its previous investments have included pasture-raised egg provider Vital Farms, plant-based ingredient producer Nutriati and MycoTechnology, which is developing functional ingredients from mushrooms.
A market source told Agri Investor capital for the Verde investment came from the firm’s debut vehicle – Manna Tree is the first outside investor into Verde. Drever declined to discuss the vehicle’s fundraising target or return expectations.
“A big portion of our investor base is [made up of] people that are looking to participate, not just from an investor standpoint, but from a distribution and relationships standpoint,” he said. “A large portion of them are very interested in ‘connecting dots’; connecting relationships, whether it’s to their own ventures that they are already invested into or other relationships they have.”
Although many firms have kept their distance from conventional beef production, Drever said Manna Tree found there is significant competition among investors for companies that can prove their supply chains address consumers’ sustainability and animal welfare concerns.
“People still want their beef, they just don’t trust what is being put on their plate,” Drever explained. “We really looked for companies that were overcoming the transparency challenges.”
Woburn, Massachusetts-headquartered Verde provides grass-fed, organic beef sourced from family farmers in Uruguay, North America, New Zealand and Australia to retail, club and food service providers that include Wal-Mart, Amazon and Wegmans. Its Hereford and Angus cattle are given an average of two acres on which to roam and Verde’s products are marketed in recyclable packaging.
Drever said that while many small family-run cattle operations have the ability to produce organic, pasture-raised beef, Verde has established relationships over 15 years of operation that helped convince the firm it is best-positioned to scale production.
“Ag is a tough space to invest in because there are a lot of people trying to do it the same way,” Drever said. “When you see people veering off and doing things differently, raising eyebrows and [being] someone who is actually scaling their company while doing it, you start to think: ‘They might be able to figure this out’.”
Verde said it planned to use the capital provided by Manna Tree to continue expansion into new channels and markets and develop new products.