SEAF nears $20m first close on Colombian agri fund – exclusive

The impact investment firm is planning to hold a first close on its SEAF Colombia Agribusiness Fund on $20m, with an additional $15m in commitments expected this summer.

Impact investment firm Small Enterprise Assistance Funds (SEAF) will reach a first close on $20 million on its Colombian value chain-focused SEAF Colombia Agribusiness Fund next month.

The firm sees opportunities to strengthen links between the country’s rural producers and growing urban middle classes, as well as increasing food exports to the US, fund executives told Agri Investor.

As the government nears a peace deal with the country’s largest guerrilla group, FARC, SEAF chief executive Bert van der Vaart told Agri Investor that renewed government focus on developing rural areas offers tremendous potential for agri investors

“We see the government as being convinced that the infrastructure has to be improved to connect the large and very fast growing cities with Colombia’s countryside,” said van der Vaart.

The firm had previously expected to hold a first close on $35 million last fall. Fluctuations in the value of the Colombian peso, committee vote delays and the lengthy time taken by LPs to carry out due diligence have slowed the process of firming up soft commitments from investors, according to Robert Vodicka, a senior associate with SEAF.

The firm expects to raise another $15 million before September, he added. It is targeting $70 million in total with a hard-cap of $80 million. The firm’s selective acquisition strategy, and the current investment environment in Colombia would make it difficult to deploy more than that, said van der Vaart.

“I think much beyond $80 million doesn’t make sense,” he said. “There’s still some consolidation going on, and we’d rather invest $80 million in three years than try to invest more than that over five years.”

Years of under-investment in rural areas has created tremendous opportunities to improve efficiency through infrastructure, operational and technology improvements, said van der Vaart. Growing demand from a professional class in the cities open opportunities in supply-chain, cold-chain and processing improvements.

Additionally, Colombia’s location and a trade promotion agreement signed with the US in 2012 give Colombia excellent access to the US market.  Colombia’s aquaculture sector hold’s particular promise, said van der Vaart.

“You’re seeing consolidation in fish farms and processing, where we can vertically integrate and take advantage of Colombia’s unique infrastructure,” he said. “You have the opportunity, for example, to export fresh, non-frozen fish to the United States.”

Other areas of opportunity include the dairy sector, where new processing technologies could improve energy efficiency and consistency of quality.

Van der Vaart said he expects the fund to begin deploying relatively quickly after reaching a first close in June.

“We have a pipeline and a couple of companies that are close to investment,” he said.

SEAF is an investment firm focused on growth capital investments in emerging markets. The firm has invested more than $180 million in small and medium-sized enterprises via 23 separate funds since 1989, according to PEI Research and Analytics.