Year in review 2023: Fundraising in the doldrums

The industry’s H1 fundraising figures were the lowest since 2011 but H2 showed improvement, meaning whole-year figures should make for better reading.

Agri Investor revealed in the summer that the H1 2023 fundraising figure for agrifood and forestry funds dropped to $1.4bn – the lowest half-year figure since H1 2011.

It was representative of the cliff edge from which fundraising across almost all private markets had fallen, as infrastructure, venture capital, real estate and many others set records for the size of their fall.

Climate fundraising, the new darling of LPs and GPs, handsomely bucked the trend to raise “$13 billion of venture capital and $20 billion of growth/private equity dry powder in closed, climate-specialized funds in 2023 so far,” said a September CTVC report.

Our work behind the scenes to make space for this burgeoning capital pool in the Agri Investor fundraising report – given that many climate funds are raised with a mandate to invest in agtech, water, farmland or forestry – already makes clear that H2 data will make for significantly improved reading.

And depending on the pace of deployment of the UAE’s $30 billion Altérra climate fund in 2024, numerous sustainable agrifood and forestry vehicles could find themselves propelled towards fundraising milestones in the year ahead by the mega-fund.

Closer to home among the sector’s core agrifood and forestry vehicles, we have already seen H1’s $1.4 billion figure doubled singlehandedly in September by Paine Schwartz Partners’ $1.7 billion Food Chain VI.

Besides becoming Paine Schwartz’s largest vehicle to date, it also became the third-largest dedicated food and agriculture private equity fund ever, according to Agri Investor data.

First and second place still belong to TIAA’s $3 billion Global Agriculture Fund II and the $2 billion Global Agriculture Fund I.

We have also seen a fund close from Gresham House, with the firm hitting its £300 million ($369 million; €346 million) target on the 2021-vintage Forest Growth and Sustainability Fund.

The vehicle will generate returns through sustainable timber harvesting and carbon credit sales, and has the capacity to provide distributions in the form of carbon credits.

The fund has a 20-year term and the firm will seek to deliver a net IRR of 6 percent in “pure forestry returns,” while “any carbon credit will be in excess of this return target, creating upside potential,” a Gresham House spokesperson told Agri Investor.

Bringing a further €360 million to the core agrifood and forestry stable in H2 was Astanor Ventures, with the firm closing its second flagship fund above its €350 million target in September.

The strategy for the venture capital fund is largely unchanged from its predecessor and will mainly target Series A and B-stage food value chain companies trying to solve social and environmental issues.

And as this closer alignment between food production and environment grows ever closer, so too does the industry’s capacity to tap the new capital pools it needs to dramatically reduce its climate footprint.