January 10, 2018

London-based ADM Capital Europe LLP has made its first acquisition of an Australian asset through its Cibus Fund, acquiring a 1,000-plus acre fully mature almond orchard in the district of Sunraysia in the state of Victoria through a deal backed by Rabobank.

This investment is the third for the Cibus Fund, which has raised $150 million to date, following its acquisition of a majority stake  in Olivos Naturales (Innoliva), one of the largest European producers of extra virgin olive oil in October 2017, and its inclusion in a $40 million Series D raised by indoor vertical farming startup AeroFarms alongside IKEA; chef David Chang, who is also the founder of Momofuku Group, retired U.S. Army General David Petraeus, UK-based Wheatsheaf Investments, China’s GSR Ventures, and Meraas, the investment fund of Dubai’s Sheikh Mohammed bin Rashid.

Led by ADM Capital co-founder 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.

Toward this end, ADM Capital told GAI News last year 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, 90 percent of the Cibus Fund will be earmarked to invest in mid-market companies posting an EBITDA in excess of $3 million, investing 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.

“We are delighted to announce the Cibus Fund’s acquisition of over 1,000 acres of fully productive almond orchard in Australia’s prime horticultural district. The Fund is focused on identifying global opportunities to create value from the mismatches between the supply and demand of high-value foods like almonds and this acquisition provides ongoing evidence in our ability to source and execute investments in this exciting arena.”

Nuttin’ but Growth

The move into Australian nut production is a strategic one for ADM, who is not alone in noting the advantages of the market.

In May of last year, the Public Sector Pension Investment Board (PSP Investments), one of the largest pension funds in Canada, acquired a majority stake in Stahmann Farms Enterprises (SFE) – the largest pecan grower and processor and fourth largest macadamia processor in Australia.

The Australian nut industry is well poised for increased production and growth, thanks to advances in variety breeding and farm practices, higher prices and profitability, and the China Free Trade Agreement, which will phase out all tariffs on Australian nuts over a period of five years.

In 2015, nuts became Australia’s most valuable horticultural export, according to the Australian Nut Industry Council, accounting for just over 50 percent of the country’s horticultural exports, reaching a value of just over $1 billion, reported  AFR.

“It’s pretty extraordinary,” Jolyon Burnett, chair of the Australian Nut Industry Council, told AFR last year. “You’ll often hear about apple exports or citrus exports or table grape exports – and they’re doing well and the government has been encouraging those exports – but for nuts to have grown in almost a decade from almost nothing to more than 50 percent of total horticultural exports is pretty extraordinary.”

Aligning with Value

The Cibus Fund announced its first $100 million close in May 2017. Although not able to disclose investment amounts due to confidentiality agreements, ADM Capital did inform GAI News last year that the fund has attracted high quality cornerstone investors that include Arch Capital Group Ltd., an unnamed U.S.-based pension fund, and ADM Capital. Continuing  to target a wide range of global institutional investors, the fund is targeting a $500 million close in 2018.

Aligning with the fund’s philosophy of partnering with category leaders that have solid leadership teams in place and evident technological advantage resulting in superior returns, the fund will focus on investments along the value chain including in seed, fertilizer, and ag machinery and chemical producers; land-light producers of high-value nuts, fruits, vegetables, meat; aquaculture; processors and value-adders; and distributors and logistics providers.

Commenting on the orchard acquisition, Frank Barillaro, investment director for ADM Capital, said, “This is a high-quality acquisition for the Cibus Fund and reinforces our commitment to sustainable investing. Our acquisition aims to take advantage of Australia’s counter-cyclical almond production to the United States and offers a mature, high yielding asset that will deliver near term cash flows over a long duration investment. We look forward to working with the management team to further strengthen operations and facilitate delivery into the demand-led global growth opportunity for high-value almond production.”

-Lynda Kiernan