Greenhouse-grown fruit and vegetable producer Mucci Farms has acquired a controlling interest in Ontario headquartered Orangeline Farms, which grows and sells greenhouse peppers under the Zing! brand. Financial details of the deal have not been disclosed.
The deal sees Ontario-based Mucci acquire Orangeline’s 32 acre greenhouse, a warehouse and an additional 68 acres of land, in addition to an unspecified stake in the company. Mucci is backed by Canadian private equity firm Novacap.
In May 2017, Novacap drew from its Novacap Industries IV fund, which had closed on C$470 million ($352.8 million; €316.6 million) in May 2016, to make an undisclosed investment into Mucci.
Novacap senior partner Domenic Mancini told Agri Investor that the firm’s agricultural investments to date had been greeted with enthusiasm by the pension plans, endowments, insurance companies and other investor types that had committed to the fund.
“A lot of our LPs – and not only current LPs but potential future LPs – reached out to us and inquired about co-investing in these agriculture vehicles because they like the space so much,” he said.
Antoine Casimir, a Novacap principal and Mucci board member, told Agri Investor that in the time since the private equity firm’s 2017 investment in Mucci, it had noted increased investor interest in controlled environment agriculture.
Casimir added that Mucci had built greenhouses in Ohio and Ontario since Novacap’s investment and it was exploring a variety of capital sources to support further expansion plans, including acquisitions and greenfield development.
“Our learning curve has been how investors characterize this as far as their asset classes,” he said. “Is it a real estate deal? Is it an agriculture deal? Is it a private equity deal? Depending on who you talk to, they may put it in different buckets.”
Mancini added that Novacap classifies its agricultural investments in an industrial grouping that also includes manufacturing and distribution sector investments.
Casimir said Mucci has pursued “lit agriculture”, where crops are grown hydroponically under growing lights, to offset traditional greenhouse growing seasons.
A typical vine crop greenhouse is planted in February before being harvested from April until October and sitting idle for the winter. Mucci’s additional lighting allows it to plant its greenhouses in September, harvest between November and early July and let them sit empty over the summer to avoid competing with field crops.
“We’re looking to reduce food miles and increase freshness,” Casimir said. “From our customers’ perspective, getting locally grown produce in the winter, the freshness savings really offset any cost disadvantage.”
He added that the near-term focus of Mucci’s expansion would be east of the Mississippi River, and that the company was open to operating in Midwest and West Coast markets over the longer term.
Casimir said Mucci hoped to demonstrate how its established access to large retailers allowed for price stability. He said he hoped this would make other family-owned businesses approaching a succession comfortable with joining the Mucci platform.
“For a grower to partner with Mucci, their stuff is going to move and they are going to get good returns on it,” added Casimir.