Riverstone SPAC targets ag for its decarbonization potential

Robert Tichio says the $402.5m vehicle is hunting growth-oriented agriculture opportunities to match the SPAC market’s early focus on mobility, electrification and other carbon-transition subsectors.

Riverstone Holdings’ decarbonization-focused SPAC is exploring markets related to biological inputs, controlled environment agriculture and carbon farming, said the executive leading the $402.5 million vehicle.

“Any solution to mitigate and reduce the pathway for carbon increase globally has to go through agriculture,” Decarbonization Plus Acquisition II chief executive Robert Tichio told Agri Investor.

“There needs to be capital formation that happens in agriculture in order to help farms reduce their greenhouse gas emissions and their life cycle emissions.”

Tichio also serves as partner and managing director at New York headquartered Riverstone, which manages $38.95 billion in assets and specializes in equity and debt buyout and growth investments in the global energy and power sectors.

Riverstone executives told the $74.89 billion Alaska Permanent Fund last month the renewable energy business is moving beyond wind and solar, toward more of an “industrial focus on decarbonization.” They highlighted subsectors of particular interest including hydrogen, mechanical carbon capping and “agricultural opportunities.”

The prospectus for DCRB II notes that the “legacy global agriculture complex” – like its “industrial” and “urban” counterparts ­– has historically seen little investment focused specifically on reducing carbon intensity.

Tichio, who described agriculture as being part of the decarbonization “frontier” in a recent Pitchbook interview, explained that ag-related markets of particular interest to DCRB II include water treatment and waste management, farm energy decarbonization and on-farm practices proven to reduce emissions.

He highlighted BioConsortia, PivotBio, and AgBiome as examples of biological input companies DCRB II was not engaging directly with but that are indicative of the markets it is exploring.

Tichio similarly mentioned Moleaer – a Carson, California-headquartered startup developing nanobubble technology to increase yields and nutrient uptake in greenhouses – as an example of how “low impact” controlled-environment ag might be relevant for the vehicle.

DCRB II’s scope also includes, he said, investments that reduce emissions by enhancing efficiency of grain sales and transport.

“Digitization is coming to agriculture as one of the last frontiers of digitization in the global economy,” Tichio said. “The ability to make it more efficient and reduce the carbon footprint of the farm by extension is enormous.”

Tichio said that while investing from other vehicles, Riverstone previously spent time with Indigo Agriculture management and continues to be very interested in opportunities related to measuring, capturing and storing carbon in agricultural soils.

“We think that’s a real business,” he said.” It may not be a business today. It may not be a business tomorrow, but in the next five years, we think that business has legs.”

The first iteration of DCRB priced its initial public offering at $11.50 per share in October before merging with hydrogen mobility focused Hyzon Motors last month. In mid-February, Riverstone announced plans to raise up to $402.5 million for a third iteration of DCRB, the filing for which included references to agriculture identical to its predecessor’s.

As the SPACs’ sponsor, Tichio explained, Riverstone’s role is to validate a set of science and data supported businesses not yet widely understood in public markets.

“Ag is the perfect example. If you asked the typical investor: ‘Where do you see innovation in the agriculture complex?’ They are going to set aside companies like Syngenta and Monsanto; large-scale multibillion-dollar companies; great companies, nothing to begrudge them,” he said.

“They [SPAC investors] haven’t yet been provided the same fertile inventory of highly impactful, growth-oriented successful investments like we’ve now seen in mobility, electrification and other areas of the decarbonized economy. That’s, frankly, what we are excited to think about bringing to market.”