Power Corp. of Canada’s POW-T new private equity fund has raised $210-million for investing in the agriculture and food sector, targeting companies that focus on sustainable production in hopes of reducing costs as consumers face inflation.
Investments by Power Sustainable Lios, a subsidiary under the Montreal-based financial conglomerate, will include a category known as controlled-environment agriculture. That would encompass vertical farming, which typically involves automated indoor systems for growing leafy greens, with workers handling the harvesting and packaging.
Food processing and distribution are among the other areas in the agri-food supply chain being explored for investment by Power Sustainable Lios.
“Food inflation is very scary for consumers,” Jonathan Belair, managing partner of Power Sustainable Lios, said in an interview on Wednesday from Montreal.
“With the companies that we’re investing in, the objective is to contribute to a solution around food inflation by focusing on localization of food production and reducing the variability and the volatility that exists as a result of climate change – as a result of massive droughts, flooding or pest infestations which will destroy crops.”
Most of the companies being vetted for investment are either family-owned or founder-owned, with less than $200-million in annual revenue and in North America.
“Our mandate is to really drive a more resilient and sustainable food system,” said Mr. Belair, who added that investment in aquaculture is another possibility.
Initial investors include Canadian Imperial Bank of Commerce, BMO Capital Partners, Canada Life Assurance Co., Farm Credit Canada, Export Development Canada and Fonds de solidarité FTQ.
Power Sustainable Lios expects to raise at least another $90-million for its inaugural Lios Fund by the end of September.
The agri-food private equity fund intends to invest from $25-million to $50-million in each company, and that could involve holding majority or minority stakes.
“This is truly a pool of capital that, from a mandate perspective, is there to serve and support mid-market companies operating within a critical sector of the economy across North America,” Mr. Belair said. “You think of the role that food plays within society and the current dynamics that are occurring around food inflation and food scarcity.”
A report last year by management consulting firm Deloitte Canada cautioned that while consumers are demanding healthier food options, the choices are usually too expensive for budget-minded shoppers. “Not everyone has the time or resources to shop at local farmers’ markets, specialty stores or specialized grocery stores,” Deloitte Canada said.
Mr. Belair said he plans to work with companies to spur the production of food for the mass market and not concentrate on higher-end products. “You can’t necessarily drive that change by simply focusing on premium offerings. You have to be able to provide a product offering that’s accessible to the masses,” he said.
Farm Credit Canada, a major lender in the agri-food industry, welcomed the influx of money into the Lios Fund. “This investment demonstrates our long-term commitment to promoting sustainability throughout the food value chain, which is vital to the success of our customers, the industry and our planet,” Farm Credit Canada vice-president Rebbecca Clarke said in a statement.
Power Sustainable Lios falls under the umbrella of the Power Sustainable division, which has renewable energy and decarbonization businesses.
Olivier Desmarais, chairman and chief executive officer of Power Sustainable, said the initial investors in the Lios Fund are viewing sustainability as an important economic driver that will create value for companies during the continuing transformation of food production systems.
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