Summary and Trends on Global AgInvesting NY 2019 - Day 1
- By: "Farm Tender" News
- Hay & Fodder News
- Apr 03, 2019
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By Amit Jois - Partner at Johnson Winter & Slattery.
Water and sustainability were the dominant themes on the first day of the Global AgInvesting conference in New York.
"A decade ago sustainability was about reputational risk. Today it's an inherent part of strategies. It's just good business," observed one presenter. This goes for PE, too, where sponsors are seeing the most attractive opportunities in emerging companies that are solving big problems and going after big markets with inherently sustainable business models (eg haulage savings, land use, waste minimisation and water access).
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The highlight of the day for me was a session on the challenges associated with structuring investments to fit the asset class, limited partners' abilities and constraints and general partners' depth and breadth. There are legal and commercial complexities in this 'alignment of interests': minimum commitments, liquidity, control, resources, performance, fees, valuations, governance, deal structure, key persons, asset class and LP/GP rights.
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The day concluded with a panel on industry consolidation and M&A in the agricultural sector. The key takeaways:
* There has been massive consolidation in the agricultural input segment since 2013/14, with regulator impacts driving further M&A activity in 2017/18.
*The next wave of consolidation / integration is in the distributor channel segment. We are seeing this in Australia right now with Nutrien's proposed acquisition of Ruralco. Keep an eye out also for producers looking to disintermediate channels and create direct relationships with farmers through digital ag.
* On digital ag, there has been no blockbuster AgTech yet (although I can think of one or two Australian businesses that are potential game changers). The answer is probably a services model that plays somewhere in the intersection of data, predictive analysis, banking / finance, risk management and insurance / reinsurance.
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Stay tuned for more.
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