NGP Global Agribusiness Partners (NGP Gap), a subsidiary of private equity firm NGP Energy Capital Management, has closed its debut vehicle on $402 million, getting demand for more than its initial $320 million target.
The fund is the first agriculture-specific offering from NGP Energy Capital; the private equity firm’s $3.6 billion NGP Natural Resources X has a 10 percent allocation to agribusiness and water that has been handled by NGP Gap since it closed in 2011.
From this allocation the firm realised the potential for further investment into the sector and so launched its ‘NGP Agribusiness Follow-on Fund’, according to Mark Zenuk, managing director of NGP Cap.
“We have the ability to invest additional capital in some of the existing investments if they need it and that is why we called it the follow-on fund,” he told Agri Investor adding that investment into new companies is also very likely.
The fund’s investors are predominantly existing investors in NGP’s existing natural resource funds and Zenuk has noticed increased interest in agriculture investing from the investment community.
“There has been increasing interest among the financial LP community for private equity-style managers or funds to operate in agriculture,” he said.
NGP Gap focuses on companies that are looking for growth equity to expand existing businesses and that are willing to take a private equity partner in doing so. It does not invest into early-stage companies.
“We like to partner with owner-managers that have a need for capital and a partner to complete their business plans,” said Zenuk.
NGP Gap focuses on the following agribusiness sectors: agriproduct distribution and services, commodity storage and merchandising, transportation and logistics, commodity processing, food and feed ingredient processing, food service manufacturing, packaging and distribution
The 10-year fund is targeting an IRR of 25 percent. Zenuk would not disclose the fee structure or investment period.