Last month, TPG’s $2 billion impact-investing vehicle, The Rise Fund, made its inaugural agricultural investment, purchasing Proterra Investment Partners’ stake in fresh dairy product provider Dodla Dairy for $50 million. Below, Joy Basu, the food and agriculture impact sector lead for The Rise Fund, tells Agri Investor about subsectors the fund will focus on and where agriculture fits within the fund’s broader impact focus.
How does agriculture fit within The Rise Fund’s impact investment focus?
Rise views agriculture as an important sector to help drive both social and environmental impact. To adequately provide for a growing population in a resource-constrained planet, we must produce more food with fewer natural resources – and make better use of the food we do grow. Meanwhile, as many of the world’s poorest people rely on agriculture for their livelihoods, we can develop the industry to help people raise themselves out of poverty.
Are there regions, sectors or sub-sectors that are a focus of The Rise Fund’s agricultural investments and why?
Regionally, we’re particularly leaning into opportunities across the US, south Asia, South-East Asia and north and east Africa. This is an early view, informed by the impact potential of this industry in those regions, as well as TPG’s own experience and current macroeconomic dynamics.
Regarding sectors, we are open-minded across the value chain. Areas where we think we can particularly help drive impact include access to inputs and input distribution. We are also excited about on-farm technologies that both help to reduce resource intensity and improve yields.
From a production perspective, we are looking at sustainable livestock and aquaculture. The livestock element fits into our impact theme on diminishing rural poverty and we’re focusing on how access to livestock can help underserved communities find their way out of poverty. The aquaculture element fits into our impact themes on reducing the resource intensity of the food system while meeting increasing demand for protein.
Other subsectors we are excited about include opportunities in storage and handling that helps to reduce waste. That includes both reducing post-harvest loss in emerging markets and reducing commercial and consumer loss in developed markets. We are also looking for opportunities that improve packaging and the cold-chain in order to tighten our ability to better use and consume the food we do grow.
On distribution in developed markets, we’re excited about models that can reach traditionally underserved customers with healthy produce.
Are there sectors or subsectors excluded from The Rise Fund’s remit because they do not meet criteria for returns or social impact?
We wouldn’t exclude much out of the gate. That said, certain investments like permanent crops, cropland likely don’t fit into the private equity time horizon. Some other larger infrastructure plays can be really impactful in agriculture, but they have a different return profile, and so I think those would typically be a better fit for another category of investor. With some agrochemicals, we would do a detailed impact analysis to understand whether or not they net positively for the farmer and society.
Can you describe the ways in which the process of strengthening a supply chain in an investment from The Rise Fund differs from how a supply chain would be strengthened in an investment from another TPG fund without an impact-investing overlay?
While TPG always invests with strong ESG considerations, The Rise Fund also proactively sets targets to improve both the financial and impact performance of its portfolio companies. We have an explicit dual-mandate to work with our management teams to intentionally build their businesses in a way that delivers greater societal impact, alongside a competitive return. While this lens may not alter the process we undertake, we would likely track KPIs and establish partnerships that account for a broader range of stakeholders in the value chain.