Canadian asset manager Power Sustainable has held a C$210 million ($162 million; €154 million) first close on its debut food fund.
Lios Fund I has a C$300 million target and will invest in mid-market companies across the whole food value chain in North America, targeting business with revenues less than “$150 million to $200 million,” managing partner Jonathan Belair told Agri Investor.
The vehicle will seek to take majority or “meaningful minority” ownership positions in sectors including food production, processing, ingredients, manufacturing, and retail and distribution.
“The food system is facing a significant multi-decade structural disruption, which will impact all participants within the food industry,” said Belair.
“This transformation is a result of several macro challenges, including insufficient natural resources to support global calorie demands in 2050, a food waste crisis, agri-food being responsible for 25 percent of total carbon emissions globally, and rapidly changing consumer preferences towards more sustainable food offerings.
“Although the pace of change will vary across the food value chain, the importance of sustainability and transparency in the food industry is rapidly increasing, and sustainability-linked consumer food products are growing much faster than traditional products.”
The close-ended vehicle has a 10-year term and a C$400 million hard-cap. Belair declined to disclose the return rates the Lios fund will target but did clarify that it will seek to deliver “market returns similar to other growth equity funds.”
Investors into the vehicle include The Canada Life Assurance Company, Farm Credit Canada, Export Development Canada, Fonds de solidarité FTQ, BMO Capital Partners and Canadian Imperial Bank of Commerce.
Power Sustainable has approximately C$4.2 billion of assets under management and has a background in infrastructure, private equity and public equities.
Belair said the firm’s entry into food and agriculture is a natural fit because its investment team has “deep experience across agri-food and private equity, including broad connectivity and relationships across the food value chain and in other relevant industries, especially in North America.”
“In addition, the team has extensive operating experience within best-in-class agri-food companies as well as trusted relationships with key industry/sustainability groups,” he added.