The agriculture industry has been mired in recession for almost four years, and Midwestern states like Iowa have felt the anguish. For farmers, there are concerns over lower commodity prices, debates over genetically altered crops, and the demands of large-scale precise farming, the result of big mergers in the food business.
But, despite the gloomy landscape, there are many good things happening in the increasingly high-tech worlds of agribusiness and biotechnology. These fundamental changes are occurring at a time when mainstream capital sources don?t quite understand the industry, according to Cybus Capital Markets LLC, a Des Moines, Iowa-based investment bank that invests in food, agribusiness and related industries.
In 1998, Cybus entered into an equity partnership relationship with the Iowa Agricultural Finance Corp. (IAFC) to create a $43 million for-profit equity fund comprised of public money from the state of Iowa and private institutional investors. The objective is to generate competitive marketing investment returns in Iowa food and agriculture and to facilitate private investment capital in the industry. “We build favorable exit scenarios for our clients,” said Thomas Steen, a principal with Cybus. “Dealflow is on our minds every second of the day.”
Cybus has been actively seeking new life-science enterprise candidates for its Tecterra Fund, including companies engaged in plant or animal transformation technology, new foods or fibers, or novel uses for crops or crop wastes. It has been going after companies with annual revenue of $5 million or more, that deliver above average returns and can create opportunities for participation by producer groups in Iowa and enhance the state?s economy.
The Fund?s first investment was a $2.2 million stake in Rudi?s, an organic commercial bakery. Rudi?s will use the capital to build a 50,000-square-foot commercial bakery to serve the East and Southeastern U.S. organic food markets with organic, all-natural baked goods.
In addition, a newly created farmers? network ? the Iowa Organic Farmers Network LLC ? will benefit from a stake in the investment as well as supply arrangements potentially involving a variety of organic ingredients for the baking operation.
The Fund also made a private equity investment in Sioux-Preme Packing, a leading processor and supplier of specialty pork products to high-end consumer and foodservice markets.
The agreement allows Sioux-Preme to grow its operations and gives key Iowa producers ownership in the company to expand the supply relationship. Terms of the transaction were not disclosed.
It recently invested in StaufferSeeds, an Omaha, Neb.-based regional corn seed provider that develops high-quality hybrid seed corn lines. StaufferSeeds owns a substantial equity stake in ProdiGene, which is said to be the only company to have commercialized recombinant proteins from transgenic plants for the biopharmaceutical and industrial markets.
Separately, StaufferSeeds has been working to develop the StaufferSeeds ValuePlus product line of Identity Preserved hybrid seed corn for the past three years. The StaufferSeeds ValuePlus IP hybrid corn seed products are the bio-reactors in ProdiGene?s industrial and pharmaceutical protein production system. This system has shown to be a viable alternative to traditional animal and bacteria cell-based protein production systems.
Contact Ken Ryan: Kenneth.Ryan@tfn.com