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Nicaraguan cocoa producer turns to institutional capital

Agro Nica Holdings will launch a $40m institutional fundraise next month after recently completing an early round from family office capital.

Agro Nica Holdings, a Nicaraguan cocoa producer, is set to launch an institutional fundraise in three weeks’ time and is targeting $40 million in commitments.

The firm has hired Mark Bishop, managing director, investment banking at INTL FCStone Securities in New York, as a strategic advisor to help structure and place the offering.

The company recently closed a high net worth and family office round of fundraising to develop 2,000 hectares of cocoa plantations in the Northeast of Nicaragua. This initial round will also put in place the project’s infrastructure and equipment, according to David Glossinger, vice-president of corporate development at Agro Nica.

“Before we reach out to institutions we wanted to do the first round with family offices to get organised and show institutions how it will look,” he said.

Institutions will buy units in the limited liability company and their stake will count for a majority. The project’s sponsor, and on-the-ground operator, is a French family that Glossinger and his US partner John Warrington met in 2003.

“The family is very involved with agriculture and is one of the most well-known and developed families for agribusiness in Nicaragua,” he told Agri Investor. “What’s really important is that we have the skill set and experience to execute, while on the other side they’re firm believers in sustainability.”

Glossinger, Warrington and the family first launched an agricultural project in Nicaragua over 10 years ago and have touched on various different industries since then, including timber and coffee. They are in close contact with non-governmental organisations and multi-lateral institutions regarding the sustainability credentials of their projects.

They partnered with the World Bank on the timber business but are unlikely to go down that route again because the bank issued debt and not equity.

“We like Nicaragua a lot,” Glossinger told Agri Investor. “There are no restrictions on foreign land ownership or on capital flows in and out of the country. There are free trade agreements in place, and general infrastructure is improving by the day. The current government is very pro-business,” he said. Nicaragua now ranks as the best Central American country to do business in by the World Bank.

The proposed term for any institutional investment is 10 years because Agro Nica wants investors that will commit to the project over the longer term. “Ten years is a comfortable timeline to mature the project and look at next steps. We need investors who want to grow something meaningful,” said Glossinger.

The new round of funding will expand the development to 8,000-10,000 hectares. Agro Nica is not fully integrated, but will take on some processes beyond the primary production of cocoa such as fermenting and drying the cocoa to make it ready for sale. This will help the company have direct relationships with buyers: “There is great value in going to a large buyer and giving them first rights,” said Glossinger.