June 10, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Open Prairie Rural Opportunities Fund, an $81 million private equity vehicle operating as a USDA-licensed Rural Business Investment Company (RBIC) providing capital for agribusinesses across rural America, has announced its first exit through the sale of Legacy Seed Companies.

Upon the fund’s launch in 2016, Open Prairie partner and vice president Jason Wrone said in a USDA press release “We live, breathe and believe strongly in rural America and are pleased to be working with USDA, the Farm Credit System, and other entities that share our passion for building successful companies that have a meaningful impact on their respective business sectors and the communities in which they do business.”

Structured as a balanced private equity fund offering debt and equity capital of between $2 and $10 million to growth and later-stage companies within the food and agribusiness value chain, the Open Prairie Rural Opportunities Fund was established as a vehicle geared to capitalize upon projected world population growth to 9 billion; a 70 percent increase in caloric demand; and crop demand growth of more than 100 percent by 2050.

The fund announced an initial close at $55 million in January 2018 led by institutions within the Farm Credit System, family offices, commercial and community banks, farm organizations, and individual agricultural investors. Of this total, CoBank committed $7.5 million. 

Open Prairie Rural Opportunities Fund made its first investment in July 2018 in Tillerman Seeds, a Michigan-based seed company focused on non-GMO product lines. It was this investment that enabled Tillerman to pursue its strategy of regional acquisitions, bringing in Wisconsin-based Legacy Seeds, a leading producer of non-GMO alfalfa, corn, soybeans, wheat, turf, and cover crop seeds, which operated as a stand-alone holding company that currently includes two brands – DF Seeds and Legacy Seeds.

The company is ranked third in the U.S. for alfalfa sales, and is a leader in the specialty soybean market. It also offers unique product lines in corn and wheat, including non-GMO and organic lines.

“Seed is the driver of value creation in agriculture as food starts from seed,” Kip Pendleton, executive chairman of Legacy Seeds told GAI News in March 2020. “Four global companies: German-headquartered Bayer, U.S.- based Corteva, China’s ChemChina Syngenta, and German-led BASF control over 82 percent of the U.S. market. We work with all of these companies but are focused on the big niches of the market that are too small for these companies.”

Pendelton continued, “The market has moved and the consumer is demanding cleaner food, largely in non-GMO and organic products. At Legacy Seed Companies, a great example for us to meet that changing consumer taste is our focus on the large niche of organic seed, of which we believe we are a market leader.”

“The growth of Legacy Seed Companies is a compelling testament to the potential of rural American companies,” said Lee Strom, partner, Open Prairie.”Over the last three years, Open Prairie has worked with Legacy Seed Companies to successfully achieve operational efficiencies through implementation of new technology infrastructure, expansion of its geographic footprint within the upper Midwest and enhancement of its team with the addition of talent at all levels of the organization including Colin Steen as Chief Executive Officer.”

Legacy Seed has leveraged its R&D capabilities and has partnered with global leaders in the branded food and animal nutrition industries to capitalize on rising demand for higher levels of sustainability, transparency, and quality in the ag supply chain, resulting in gains in market share and top-line revenue growth for the company, according to Strom.

The exit of Legacy Seed Companies generated a positive return for the partners in the Open Prairie Rural Opportunities Fund and achieved the goal of fostering greater sustainability, productivity, and profitability in rural America, according to Open Prairie founder and managing partner Jim Schultz who said, “with eleven companies in the Open Prairie Rural Opportunities Fund, we continue to build a strong portfolio of investments like Legacy Seed Companies that are developing innovative products and technologies that will have a lasting impact on agricultural and rural American economies.”

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan@globalaginvesting.com.