January 30, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Swiss impact investment manager responsAbility Investments AG announced first closings for two of its investment strategies, totaling US$274 million.

Sustainable Food in Asia

The firm’s second private equity growth strategy in Asia – Sustainable Food in Asia – has achieved a first close at US$173 million, toward a final closing target of US$300-$400 million. With this capital, the fund intends to focus on taking significant minority stakes in growth companies across Southeast and South Asia. 

“This successful start to the fundraise comes on the back of the track record of our first fund, which is showing a strong performance as well as delivering high impact, changing the lives of millions of small holder farmers across Asia, and implementing sustainable agricultural practices on hundreds of thousands of hectares of land,” said Stephanie Bilo, chief client & investments solutions officer, responsAbility.

“We are very excited about the fact that institutional investors are increasingly interested in the sector and recognize the attractiveness of the opportunity, especially in times of high inflation, and concerns for food security globally.”

The firm explained that the targeted region presents huge potential, as it is on pace to more than double its total spending on food to more than US$8 trillion by 2030. The fund aims to capitalize upon the 1.2 billion young, urban consumers across the region expected to join the upper middle class income range. 

And given the climbing demand for safe, healthy, and convenient foods, capital commitments will be focused on mid and downstream companies that are leading the charge in efficiency in food production and distribution across South and Southeast Asia including India, Indonesia, Vietnam, and the Philippines. 

Rik Vyverman, head of sustainable food private equity, responsAbility, explained how the firm is ideally positioned to drive success, saying, “With our local presence in India, Bangkok and our soon-to-be-established office in Singapore, our sector know-how and proven experience, we are not only able to identify trends and growth drivers which are transforming the food value chain, but most importantly are able to translate this into high quality and proprietary deal flow.”

Sustainable Food in Latin America

responsAbility’s first mezzanine financing strategy in Latin America – Sustainable Food in Latam – has made a first close at US$101 million for targeted investments in producers and exporters of mainly fruits and vegetables in Mexico, Peru, Colombia, and Chile. 

“We have opted for a structured debt approach (mezzanine finance) given that many of the investment opportunities are family owned and managed businesses and exits are not always obvious,” said Vyverman.

“We are aligning ourselves with the entrepreneurs in terms of the growth we are financing and as such are endeavoring to generate attractive risk adjusted returns and provide a recurrent income for our investors at the same time. Obviously, we only select companies that we assess to positively contribute to overcoming the challenges of sustainable food supply and resource efficiency.”

A 326-page report – released by the Organization for Economic Co-operation and Development and the United Nations’ FAO in 2019 that provided a projected outlook for 2019-2028 – noted that there existed “strong growth opportunities” for high-value fruit and vegetable production in the Latin American region. 

Over recent decades, fruit and vegetable production in the region has consistently been increasing given the competitive advantages of natural resources, available land and water, diversity of climatic zones, and biodiversity. Estimates published by the USDA in May 2022 showed that produce imports to the U.S. from South America were projected to increase in value by $2.2 billion over previous estimates of $20.1 billion made in February 2022. 

Combined with consumer bases that are increasingly knowledgeable and health conscious, and demand for fresh produce in the U.S. on a year-round basis, responsAbility stated that the growth of Latin American exports is projected to continue. 

~ Lynda Kiernan-Stone is editor in chief 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 Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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