London-based private equity and investment firm, ADM Capital, has completed a $100m first close of its new global agribusiness investment vehicle, the Cibus Fund.
The new fund, which will focus on mid-market investment opportunities in sustainable food processing and production companies, primarily across Europe and Australasia, is targeting a $500m final close in 2018.
In addition to funding from ADM Capital, cornerstone investors in Cibus are Arch Capital Group, the insurance, reinsurance and mortgage insurance firm which acquired the mortgage-guarantee unit of American International Group (AIG) at the end of 2016, and a North American public pension fund which was not willing to be named.
“Although we’ve been around for 20 years and have $1.4 billion under management across Asia and Europe, Cibus is our first sector-focused fund,” ADM Capital’s joint CIO and co-founder, Robert Appleby, told AgFunderNews, adding that fundraising began before April last year when ADM sponsored the Global AgInvesting Conference in New York.
“That was when we began talking to numerous investors about this funding space, basically speaking to people who were well known to us – in many cases we’ve know then for almost a decade — and often building on previous fund-raising activities.”
AgFunder Co-Investment Fund III is now open for investment. Closing June 15, Spots are limited.
Responsible for investing around $3.8 billion during his career to date, Appleby said that working on Cibus had been a special experience.
“It’s the fund that has attracted the most interest from the most people that I’ve come across,” he said. “As such, I’m very confident of hitting our $500m target in 2018.”
The firm has invested in agriculture before in previous funds with agricultural assets of around $200 million, according to Appleby. Prominent current projects include an ongoing equity stake in a major “downstream dairy business in New Zealand” and a “1.5 million hectare cattle station in Australia, producing 80,000-100,000 head of beef cattle a year”.
“We already have nine investments in the pipeline for Cibus,” he added. “Four of these are at an advanced stage of completion with the remaining five presently going through due diligence.”
ADM Capital has assembled a specialized team to run Cibus, headed by Appleby and Jason Silm, former head of agribusiness investment at VTB Capital and director at Macquarie Agricultural Funds Management.
“The demand for high-value foods from emerging markets is driving significant opportunities for mid-market food companies, predominantly domiciled in Europe and Australasia,” said Silm. “Our team, based in London and Sydney, consists of experienced food and agriculture investment and operational experts with a strong track record across our target geographies.”
Appleby added: “I’ve been thinking deeply about food for the last few years, being motivated by the challenge of how we feed nine billion people in the not too distant future, while also looking at the art of the possible.
“In addition, I’ve been asking how we can turn the opportunities that arise from these macro challenges into investment opportunities in companies that will provide the types of return investors look for and the types of risks they are prepared to take.”
Cibus will focus on projects which will generate more food from fewer inputs, reducing the negative impacts of the industry on the environment.
“It’s clear that a combination of capital, IP, technology, big data and modern farming is really starting to form a nexus, and it’s all very exciting,” he said. “I’m now optimistic about how we feed ourselves better without using more carbon in the process.”
In fact, in 2006, the partners of ADM Capital established the ADM Capital Foundation, an impact-driven foundation focused on making change in Asia. The foundation works through research to identify environmental challenges then work towards solutions across five key areas: marine ecology, water security, air quality, wildlife trade and forestry conservation finance.
The Cibus sales pitch is to “take advantage of the significant investment opportunities presented by global demographic changes and shifting trade patterns.” It also highlights the “inability of the world’s fastest growing economies to meet rapidly increasing regional demand for high-value foods, driven by burgeoning middle classes.”
The fund says it will target companies with strong management teams that are active in one or more stages of high-value food chains. It will also look for companies that are “established category champions, and which have a demonstrable technological advantage that can support superior returns.”
Investments will also be evaluated according to their environmental sustainability, which will be treated as a “key determinant of value creation”.
W. Preston Hutchings, CIO of Arch Capital, which has enjoyed a “long relationship with ADM Capital” said he was very pleased to be a cornerstone investor in Cibus, adding that the impact of emerging market food demand is changing the world’s food map and creating significant investment opportunities.