Proterra Investment Partners drew from its Sustainable Agriculture Fund to support Northwest Farms’ acquisition of Pacific Northwest assets and operations from Ohio-headquartered Willamette Egg Farms.
Financial details were undisclosed for the December deal, which stems from Proterra’s focus on supporting expansion of cage-free egg production in the US. Willamette was owned by Michael Foods, which is itself a subsidiary of Post Holdings.
“We’ve tried to do similar things across other verticals, it’s just that the need and the urgency to invest in cage-free is here now and has been further supported as other states legislate it to happen,” Proterra managing director Mike LeSage told Agri Investor. “That is why it is the central theme for our Sustainable Agriculture Fund.”
LeSage said momentum in the market to support conversion to cage-free production started about five years ago. He added that more than 220 large companies have made some form of pledge switch from the conventional supply, with most targeting 2025 or 2026.
Proterra is building upon existing relationships with many of those companies, said LeSage, who joined Cargill spin-out Proterra in 2017 after 25 years with Cargill, which included a stint as North American proteins manager and culminated in six years as president of Cargill Risk Management, according to his LinkedIn profile.
The Northwest Farms entity involved in the deal is a newly formed company that includes several egg farming families that are also owners of Sioux City, Iowa-headquartered Versova Management, which will assume management of assets acquired in the deal. Those assets include egg farms in Oregon and Washington, which include egg-laying sites housing more than three million hens and two feed mills.
LeSage declined to share any financial details and added conversion into cage-free egg production typically costs about $60 per bird housed in a facility, dictating that it often makes more sense to build new rather than retrofit old facilities.
In June 2020, Proterra acquired a stake in Wasco, California-headquartered cage-free egg operation Central Valley Eggs from AGR Partners-backed Opal Foods for an undisclosed sum. Rather than combine cage-free egg producers into a single company, LeSage explained, Proterra plans to continue partnering with regional producers in district deals focused on specific assets.
“The industry itself is very much [made up of] family-operators and is fairly fragmented, “he said. “The gestation period is that much longer from start to finish, but the need is significant, and the opportunity set is there.”
In addition to cage-free eggs, the Proterra Sustainable Agriculture Fund strategy also focuses on the free-range dairy, sustainable beef, coffee and greenhouse lettuce production. The vehicle had raised $303 million from seven LPs as of a mid-2019 regulatory filing.
“In looking to deploy something that’s meaningful and can make actual significant, tangible progress, it’s one of these areas [eggs] where we can get traction fairly quickly,” LeSage said. “To measure progress in some of the other areas is more challenging than when you are dealing with a cage-free egg.”
In November, Proterra reached a $150 million first close on the second iteration of its credit fund, which is seeking $500 million. As of December 2020, the Minnesota-headquartered firm managed $3.6 billion, according to a regulatory filing.