August 13, 2018

ADM Capital announced it is exiting its Central Eastern European and Kazakhstan private equity business through a management buyout. The move is being undertaken to position the firm to be better able to focus on its Asian fixed income business, its global Cibus Fund, and its ADM Capital Foundation.

Collectively referred to as its CK Region, ADM’s Central Eastern Europe and Kazakhstan private equity business was founded in 2006 and encompasses the ADM Ceecat Recovery Fund, the ADM Kazakhstan Capital Restructuring Fund, and the CCL Kazakhstan Silk Road Agriculture Growth Fund.

“We are excited about the opportunity to further develop the CK Region business by developing and growing a range of private equity strategies under the CCL Capital banner,” said Anthony Stalker, a representative of the management team for Ceecat Capital Limited.

The CCL Kazakhstan Silk Road Agriculture Growth Fund was launched in 2016 with a first close of $40 million consisting of commitments of $20 million each from KazAgro and Export-Import Bank Plc (EXIM).  Over the course of that year, the fund expected to expand its geographic reach throughout Central Asia and the Caucasus and expects to reach its second and final close of between US$80 million and US$120 million.

The fund was created to invest along the entire agricultural supply chain including inputs, suppliers and manufacturers of greenhouses, seeds, chemicals, machinery, animal breeders, and suppliers of IT technology; production, including the growing of commodities; processing, including value addition and suppliers and operators of storage, sorting, and packaging; and logistics and distribution, which will include warehousing, cold storage, and transport and distribution of commodities.

Throughout these segments the fund aims to invest in equity, quasi equity, and convertible debt investments in businesses that are well positioned to leverage the growth of consumption of meat, dairy, grain, oilseed, vegetable, fruit and fish primarily in Kazakhstan.

After being reorganized and overseen by ADM Capital for three years, the CCL Kazakhstan Silk Road Agriculture Growth Fund, along with the ADM Ceecat Recovery Fund, and the ADM Kazakhstan Capital Restructuring Fund will move forward being managed by the current management team as owner-operators under the Ceecat Capital Limited name.

“Over the past 12 years we’ve been delighted to see the CK Region business go from strength to strength,” said Rob Appleby, co-founder and joint CIO of ADM Capital. “Now is the right time to allow the capable hands that have nurtured it during that period to drive the next phase of its growth and build on the strong platform we have created.”

A Core Interest

One of the core interests for London-based ADM will now be its Cibus Fund, which successfully closed on $100 million in May 2017.

Led by ADM Capital co-founders, Robert Appleby and Jason Silm, former head of Agribusiness Investment at VTB capital, and director at Macquarie Agricultural Funds Management, the fund aims to capitalize upon the significant investment opportunities generated by the ongoing evolution occurring in global demographics and trade patterns, and the inability to meet growing regional demand for high-value foods by some of the world’s fastest growing economies.

“With an unrivaled network built up over 20 years of investing, deep agribusiness sector knowledge, and a proven investment track record, we are able to clearly identify the structural growth drivers that are reshaping ecosystems and deliver on the opportunities these present for value creation,” said Appleby in May of last year.

Toward this end, ADM Capital told GAI News at the time that the “sweet spot” for the Cibus Fund will be in producers and processors that are seeking growth capital to achieve greater value through both horizontal and vertical integration in the supply chain.

Under the structure of the fund’s investment thesis upon its launch, 90 percent of The Cibus Fund is earmarked to invest in mid-market companies posting an EBITDA in excess of $3 million; while intentions are to invest between $10 million and $75 million (average $45 million) across 10 or 11 deals. For this majority portion of the fund, ADM Capital will be targeting an internal rate of return of between 20 and 25 percent and a return on invested capital of 3x, according to the company.

The remaining 10 percent of the fund will be allocated toward a secondary mandate set to invest in ‘high-growth companies in the agtech sector in the same geographies of Europe and Australasia, which notes that the high growth portion of the fund will not be making venture investments, but will be aiming to make average investments of $7 million in Series C and D rounds across seven commercial enterprises with proven positive revenue flows.

Two investments ADM has made through The Cibus Fund include the acquisition of a majority stake in Olivos Naturales (Innoliva), one of the largest European producers of extra virgin olive oil, and participation in a $10 million Series C for Israel-based agtech startup Rootility.

Based in Pamplona, Spain, and founded in 2006, Innoliva is a pioneer of super-high density olive production on its 5,000 hectares of olive groves located in Spain and Portugal.

Through its operation, Innoliva produces up to 9,000 tons of Extra Virgin Olive Oil per year with 98 percent of its output rating at acidity level of 0.2 percent or less. Extra Virgin Olive Oil needs to attain acidity levels of less than 0.8 percent to earn the classification, with lower acidity being associated with high values, indicating that Innoliva achieves both high production levels while maintaining a high-value product.

Then, in May of this year, the Cibus Fund, joined existing investors GreenSoil Investments and Middleland Capital in a $10 million Series C investment in Rootility, an Israeli-based developer of innovative root-focused plant breeding methods to increase crop yields and overall agronomic performance.

As part of the deal, Alastair Cooper, senior investment director at the Cibus Fund joined the Rootility Board of Directors.

Commenting at the time, Cooper stated, “Rootility’s unique approach which harnesses innovative technologies is a natural fit for the Cibus Fund which focuses on investment opportunities in sustainable food processing and production companies spanning growth through mid-market businesses.”

-Lynda Kiernan