Independent investment firm Wollstone Capital has struck an offtake agreement with the Ferrero Hazelnut Company and secured its first asset in Italy towards building out a 1,500ha hazelnut plantation.
The assets will be housed in a company called Planta Terra, which is a new agricultural asset platform launched by Wollstone to build out the operation.
Planta Terra has acquired a 70ha property in Lazio and has made an offer on another 220ha asset in the country, Wollstone director Nikhil Chawla told Agri Investor.
Financial details were undisclosed but Chawla confirmed the value of the first asset was in the single-digit millions, while the forthcoming acquisitions will be worth double-digit millions. The firm expects to deliver IRRs around the 20 percent mark.
The Geneva-based firm has received commitments from family offices and individual investors and is now going out to larger European and Middle Eastern family offices.
Chawla said the opportunity to become a supplier to Ferrero arose due to several factors, such as some of the principal plantations that currently supply hazelnuts to the company coming towards the end of their 35-year life spans.
Ferrero also wants to source more of its hazelnuts from Italy, which has led it to launch ‘Project Hazelnut’ in the country – a program designed to support growers investing in hazelnut plantations in Italy.
“As part of that initiative, Ferrero has given these offtake agreements to people who would be interested to invest in the land – Ferrero typically do not invest in the land and grow hazelnuts themselves,” said Chawla.
“They provide technical support as well but what is most important is the long-term offtake agreement where they have committed to taking a majority of the produce. It’s a formula-based pricing model, which is quite attractive.”
Wollstone director Vivek Chandaria added that Planta Terra has been mindful of the droughts and higher temperature levels in Italy, which can negatively impact permanent crop plantations.
“The Lazio region is a bit different because it’s inland and has higher hills, so its cooler and there’s more water that’s just naturally there,” said Chandaria. “So we believe that the temperature is going to be more moderate in terms of climate risk.”
“The second part is we made sure to acquire land that has very good history of rainfall but also access to abundant water that is in the region. There are very large dams in the area that have been setup for agriculture but because of the abundance of rainfall have not been tapped. They’re part of our safety plan for the future.”
Planta Terra has also partnered with the Università Cattolica del Sacro Cuore for research and technical collaboration, as well as to train the next generation of permanent crop farmers in Italy.