The agroforestry vehicle, which targets 10% to 12% net IRRs, has sealed its fifth deal two years after closing.
The Moringa Fund has bought a stake in Floresta Viva, a Brazilian business that runs heart of palm farms in the state of São Paulo.
The deal marks the impact private equity fund’s fifth investment. Its value was not disclosed, but Proparco, the private investment arm of the French development agency, states that the fund seeks to invest between €4 million and €10 million per transaction.
Brazil is the first producer and consumer of heart of palm, eating up as much as 75 percent of a $500 million market that Moringa says is set to grow steadily as the country’s middle-class develops an appetite for healthy foods.
“The Brazilian organic food market shows an average growth of 20 percent per year. However, the heart of palm sector is still lagging behind to meet such standards,” said Clément Chenost, an investment director at the firm.
Denouncing the environmental damage called by intensive monoculture in the past, Floresta Viva’s aims include reforesting the Mata Atlantica landscape through the planting of both heart of palm plants and native species. Fernando Meirelles, a Brazilian film director, is co-investing with Moringa as part of an investment plan meant to help the business expand.
“Floresta Viva has chosen to develop a new paradigm based on an agroforestry and agroecological multi-cropping system, maximizing profitability with the highest quality and environmental expectations,” noted Roberto Pini, the company’s founder.
The investment is being made out of Moringa’s €84 million debut fund, closed in 2015. The vehicle invests via two strands respectively focused on Africa and Latin America. A note by Salva Terra, which advised on setting up the fund, states that it has a 15-year duration and a net IRR target of 10 percent to 12 percent.
Founded in 2010 by Edmond de Rothschild Group and ONF International, an international subsidiary of the French Office National des Forêts, the firm has since raised capital from DFIs that include Proparco – via African SME-focused fund FISEA – as well as the Netherlands’ FMO, South American development bank CAF, the Finnish Fund for Industrial Cooperation and Spanish development fund Fonprode.
Earlier this year, Moringa reached a $2.8 million first close on the Agroforestry Technical Assistance Facility, a grant-based system that provides access to training, research and commercial support for farmers backed by the main fund.