Proterra backs Indonesian agri conglomerate

Emerging markets-focused Proterra Investment Partners has made a $100 million investment into Indonesian food and agribusiness firm FKS Food and Agri, according to a Proterra executive.

Proterra’s investment, made earlier this month, came from the Black River Food Fund 2, which closed on its hard-cap of $700 million in early 2015, according to Proterra managing director Tai Lin. Lin declined to say whether the investment constituted a majority or minority stake in FKS.

FKS is an agribusiness-focused subsidiary of Jakarta-based FKS Holdings that provides marketing, procurement, shipment, logistics and distribution of agricultural commodities across Indonesia. The company maintains distinct units devoted to food and ingredient supply, shipping, flour-milling, refined sugar and other ag sub-sectors.

Lin told Agri Investor in an email that the capital Proterra’s investment will support construction of new processing facilities and the expansion of existing FKS facilities both within Indonesia and the wider South-East Asia region.

Lin wrote that the growth investment was motivated by FKS’ strength in merchandising and distribution and a desire to tap into middle class growth in Indonesia, a nation of 258 million people.

“Indonesian consumers’ demand for protein, particularly poultry and soy-based products, such as tofu and tempeh, continues to increase rapidly,” Lin said. “The country is lucky to be endowed with so many natural resources (like coal, oil, ore, etc.) but it lacks (the characteristics to produce its own) food commodities; this is the structural imbalance that most international players have not really gotten exposure to.”

Tempeh, a fermented soy product that is a staple of the Indonesian diet, helps drive Indonesian demand for soy, of which the US is the predominate supplier. According to the US Department of Agriculture’s Foreign Agricultural Service, the US exported $933 million in soybeans to Indonesia in 2016, helping make nation the ninth-largest agricultural export market for the US.

Lin wrote that while current plans do not call for Proterra to play a role in managing supply relationships for FKS, the firm could do so if necessary and other funds controlled by Proterra grow soybeans on tracts of land they own in other geographies.

The investment in FKS marks the most recent foray into Indonesia for Proterra, which previously established a joint venture with Indonesian agribusiness Japfa. Lin wrote that through the vehicle, Proterra has a significant stake in Greenfields, a vertically-integrated  dairy farming, processing, sales and distribution company that launched its second modern dairy facility in Indonesia earlier this month.

“We are now partnered with two (of the three) leading agri-players in Indonesia,” Lin said.

Proterra is a spin-out from Cargill subsidiary Black River Asset Management, which was established in early 2016 and retained all related funds’ limited partners following their exit from Black River. Based in Minneapolis, Minnesota, the firm pursues investment to into companies producing for local markets under distinct strategies in food, agriculture and metals and mining.

Earlier in May, Proterra sold its stake in Hyderabad, India-based fresh dairy product provider Dodla Dairy to TPG-Growth affiliate The Rise Fund for $50 million.