ADM Capital Europe LLP, a global private equity and investment advisory firm based in London, has raised US$100 million for the first close of its global agribusiness investment fund, the Cibus fund.
It will be looking for a total of about US$500 million for the fund, including from Australian and New Zealand investors, where some of the money will be invested.
The fund will focus on mid-market investment opportunities in sustainable food processing and production companies, primarily across Europe and Australasia, as well as some developing countries.
It will have a secondary mandate to invest equity growth capital in opportunities focussed on parts of the food and agriculture value chain primed for technological disruption and innovation.
One of its two cornerstone investors is the Nasdaq-listed, Arch Capital Group, which has had a long association with the ADM Capital.
Speaking from London last week, ADM Capital co-founder and joint-CIO, Robert Appleby, who spent a lot of time in Asia during the 1990s investing in private credit, and Jason Silm, an Australian who heads up the agriculture part of the firm, said the fund aimed to take advantage of global demographic changes and shifting trade patterns.
The main demographic trend is the inability of the world’s fastest growing economies, in emerging markets with burgeoning middle classes, to meet rapidly increasing regional demand for high-value foods.
The fund will look for companies that are established category “champions” and which have a “demonstrable technological advantage” that can support superior returns. ADM Capital is also a strong supporter of ESG factors in the investment process, especially in terms of environmental conservation. It has its own foundation which focuses on environmental protection.
Appleby describes himself as: “A zoologist by training, a financier by necessity and a philanthropist by choice.” He actually received a Masters in zoology, after an undergraduate degree in zoology and anthropology, both from Oxford. Go figure. The zoology bit didn’t last long but the other two – financier and philanthropist – are ongoing.
Appleby believes that the days of aggregating land and enjoying 12 per cent annual returns, as has been the case for the past few years, are probably over. “We want to grow these businesses into larger companies,” he says.
Silm, who was a director at Macquarie Agricultural Funds Management, said the fund would be investing in vertically integrated companies which got “close to the consumer” and therefore reduced their margin volatility.
“We will be investing in high value sectors, such as meat and other protein production, but not in broad-scale land-heavy production,” he said.
Greg Bright is publisher of Investor Strategy News (Australia)