July 13, 2016

Arbor Investments, a specialty private equity firm that focuses on backing companies in the food and beverage sectors and their related industries, announced it has closed its fourth fund, Arbor Investments IV LP at $765 million, and has closed its inaugural captive subordinated debt fund, Arbor Debt Opportunities Fund I LP (DOF) at $125 million. Both funds closed significantly oversubscribed on July 7, 2016.

“We believe that the attractive dynamics in the food & beverage sector contribute to an excellent investment environment and we look forward to investing Fund IV and DOF I and continuing to deliver exceptional returns for our limited partners,” said Gregory J. Purcell chief executive office at Arbor.

Launched in 1999 in Chicago, Illinois, Arbor has invested in more than 44 middle market companies along the food and beverage supply chains in North America, including companies involved in frozen foods, backed goods, dairy, protein, bottling, ingredients, foodservice equipment, ethnic foods, food packaging, and distribution networks.

Since August 2015 the firm has been building its baking platform through the acquisition of Hudson Baking Company in August 2015 and South Coast Baking in March 2016, and added DPI Specialty Foods Inc. in December 2015.

Arbor raised its Arbor Debt Opportunity Fund I as a source of subordinate debt to its Fund IV portfolio companies and to serve to enhance Fund IV’s ability to successfully structure and execute investments while maintaining equity upside.

“Our investment philosophy and operating orientation continues to produce strong deal flow and investment returns,” said Arbor’s President, Joseph P. Campolo in a company statement. “Fund IV and DOF I will allow us to continue to target companies that are at an inflection point in their development or are undergoing a significant ownership or management transition and that will benefit from Arbor’s strategic vision and considerable expertise in the food & beverage industry.”

Opportunity in Food Innovation

Arbor’s success in raising capital for these oversubscribed middle market funds is a reflection of a broader trend toward investment in the food sector and can serve as a bellwether for investors that are backing companies in earlier stages.

A growing list of large CPG food manufacturers are exploring venture capital investments as a means to meet rapidly-changing consumer expectations and demands for product innovation. General Mills, Kellogg’s and Campbell’s have all recently launched venture capital arms.

According to Simon Burton, managing director of Eighteen94, Kellogg’s new venture capital arm, “the rate of innovation across our industry has picked up dramatically. Things are changing quickly, and investing is a great way to get a sense of what’s going to be important in the future.”

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Lynda Kiernan