Private equity firm ADM Capital Europe talks exclusively to WealthBriefing about the firm’s follow-on vehicles for the Cibus fund – a sustainable agribusiness fund – and key trends in the food and agriculture investment space. War and supply chain disruptions have made food security now an urgent issue.

Focus on the food and agriculture investment space has increased dramatically in the last 18 months, Alastair Cooper, head of venture investments at ADM Capital Europe, told WealthBriefing in an exclusive interview.

He spoke at a time when supply chain disruptions from the pandemic and Russia's invasion of Ukraine - a major food producer – have sharpened our attention on the sector.

“Everyone thought food and agriculture were small little niche markets. They didn’t know where to put them in their investment portfolio,” he said.

“Now, everyone gets food and agriculture and its importance. It has grown dramatically as a sector in terms of its focus. We have seen a real transition in the last four or five years when only specialist funds focused on it,” he said.

“We are seeing more interest from generalist funds and ESG funds. There has been a lot of HNW interest and interest from North American institutional LPs,” he added.

The Cibus platform. which aims to channel capital towards companies that are creating the future of food using technology, whilst ensuring sustainability, started in 2016.

Cooper has a mixed background in finance, food and agriculture. He worked at Morgan Stanley, before buying his dream farm in Dorset, which he turned to organic production; he was also an active investor in clean tech and agtech.

“At the firm, we are focused on what we call the perfect storm to address food production. We need to produce more food using less resources. We are also seeing limits on water availability and experiencing climate change, seeing a reduction in yields. We waste about a third of our food,” he warned.

“The present food system is broken. The tailwinds behind the food transition are growing. Governments are starting to ban negative externalities. They are demanding a reduction in artificial fertilisers, a change in plastics, and healthier foods,” he explained.

“Governments and new regulations are driving the change in markets. Consumers, especially Millennials, are also pushing it, as well as the move to net zero,” he said. “We won’t get to net zero at scale, without land and farming being part of the solution,” he said. “We have also seen inflation across agriculture commodities exacerbated by the war between Ukraine and Russia, so the focus is now on trying to mitigate inflation pressures and also on ensuring food security."

“People are worried about the fragility of our global food system, which puts focus on how technology can start to provide solutions to this,” he said.

This news service has carried a number of articles in recent weeks (see here and here) about how wealth managers are paying more attention to food production and its demands. Population pressures, wars, supply chain disruptions and the impact of new technologies have shaken up the space.

Cibus Strategy
He explained how Cibus has raised $990.8 million, investing globally across developed countries via two strategies: Cibus Fund I – $322.4 million – which predominantly invests in buyout and growth equity of mid-market companies, with a strong ESG ethic behind it.

The second is Cibus Enterprise Fund I – $65.6 million – which is predominantly late-stage venture investment providing disruptive solutions within agrifood tech. It invests in companies such as Future Meat, which produces cellular beef, chicken, lamb and pork, using a low-cost production model and fast route to market.

“They are both fully invested and performing well,” he stressed. “The Cibus Fund gives a 20 per cent rate of return and the Enterprise Fund a 30 per cent IRR. We are raising two follow-on funds, which had their first close in November 2021, and we are seeing a lot of interest in them from investors,” he added.

Investments include Withcott Seedlings, which is a large player in the highly fragmented nursery space, accounting for 11 per cent of Australia’s nursery market by plants produced with automation and robots reducing labour costs  

Key investment themes across the venture space concentrate on reducing artificial inputs, novel farming systems, robotics and automation. Aerofarms, for instance, employ an indoor vertical farming system which uses up to 95 per cent less nutrients than conventional agriculture and zero sprays, he said.

This news service is covering agriculture, forestry and food production and related businesses when surging prices have made food a hot investment topic.