Deals

NGP GAP invests $100m in malt and fertiliser companies

Investments in craft beer ingredient and Brazilian farm suppliers reflects focus on logistics and proven management.

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Malt background. Ingredient for beer.

NGP Global Agribusiness Partners (NGP GAP) has invested $60 million in craft brewery supplier Proximity Malt and $40 million in Brazilian fertiliser producer Campo Rico, it said this week.

Both companies provide value by locating facilities close to underserved consumers, said Mark Zenuk, a managing director for the firm. The pair also sport leadership teams that NGP GAP know well.  “They’re all people we’ve worked with historically,”  Zenuk added.

Since NGP GAP began as a carve-out of NGP Energy Capital Management’s Fund X, the  group has relied on a “very team-focused” strategy of investing in midstream projects that supply agricultural producers or offer a way to add value to output, Zenuk told Agri Investor.

The investments in Proximity and Campo Rico are the culmination of 12 months or more working closely with the companies’ leadership teams, he said. In both cases, key decision makers at NGP GAP had previous professional relationships with members of the teams.

Campo Rico plans to use the investment to add to its import capacity at the Port of Santarém in northern Brazil, build a new distribution location south of the port, and buy property to convert into a new blending and packing facility. The company’s primary customer base is made up of farmers operating near Santarém.

Because its facilities are closer to its customer base than competitors’, the company promises a significant boost in value to farmers.

Proximity Malt follows a similar strategy of providing products close to its consumers. It plans to locate malting plants in the US mid-Atlantic and Mountain West to target brewers in the growing craft beer industry, who can be as far as 1,000 miles from existing malt facilities, it said in a press release.

By operating on a smaller scale and locating itself closer to customers, Proximity hopes to build a name for itself in a segment of the industry that grew by 16 percent in terms of production in the first half of 2015 alone. The company expects to begin operation of its first two facilities in Q1 2017, according to the press release.