Pan-European private equity firm Silverfleet Capital, which recently sold Danish infrastructure agribusiness Cimbria for €310 million, is on the hunt to acquire an agribusiness or related assets for its €870 million Fund II.
Partner at the Prudential spin-out Gareth Whiley told Agri Investor that he is looking for an opportunity to make a mid-market buyout in an agribusiness based in Western Europe with a global presence or the potential to have one.
Whiley is looking for deals in areas such as agtech platforms, agricultural services, specialist food businesses or food security and testing, but not primary agricultural production.
The firm now plans on investing between €75 million and €350 million per deal. It had invested about €150 million in food and agribusiness from its €670 million Fund I, he said. That included Cimbria and sausage casings company Calle, which it sold to Clayton, Dubilier & Rice in April.
“While agribusiness does not sit in our investment strategy yet as a sector [alongside business and financial services, healthcare, manufacturing and retail], there are a couple of macro-themes that we keep coming back to and one of those is food supply and safety under the theme of growing and aging populations,” said Whiley.
He said he would like to make at least one deal in the space with the firm’s Fund II, now about 30 percent invested. “We typically do about 10 deals in our funds, so that would mean at least 10 percent ending up in the space. It is just about finding the right opportunity.”
Cimbria’s sale, which sister publication Private Equity International reported will generate a return of 3.3x and an internal rate of return of around 40 percent for investors, depended on implementing a more active international sales process and moving the businesses’ manufacturing operations to the Czech Republic to save on cost, according to Whiley. He said that a significant number of traders and private equity firms bid for Cimbria.
As a global seeds and grains storage and processing firm, Cimbria is not as dependent on commodity prices as market observers might assume, Whiley added. “Food security and dealing with governments also plays a big role when it comes to infrastructure deals in countries like Saudi Arabia and Egypt.”
Cimbria signed a deal to establish 28 storage and sorting units in Egypt and established a sales office in the Middle East.
The sale process was not affected by Brexit, and the firm will continue to make investment in assets with a global presence.
“Being an international fund and euro-denominated helps. There are UK-only funds that have sterling and in some ways they are fine. If we were a sterling fund trying to do what we do, that would be a nightmare,” Whiley said.