By Lynda Kiernan
ADM Capital Europe has led a EUR60 million (US$66 million) funding round for M2i Life Sciences, a biological crop protection startup based in France that is producing pheromones to effectively, sustainably, and economically replace chemical usage in agricultural production.
The round also included Eurazeo Growth, Tethys Invest, Creadev, and France 2i, which is managed by Raise Impact.
The capital was successfully deployed through ADM’s Cibus Fund, which in January of this year had a final close at $332 million. Concurrently, ADM announced that the firm had also raised an additional $130 million to be earmarked for co-investments, resulting in the cumulative raising for the fund topping out at $452 million.
ADM Capital announced a first close on the fund at $100 million in mid-2017, on its way to a projected $500 million target.
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.
Under the structure of the fund’s investment thesis upon its launch, 90 percent of The Cibus Fund is earmarked to invest in mid-market companies posting an EBITDA in excess of $3 million; while intentions are to invest 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.
This investment in M2i gives ADM Capital a minority stake in one of the few global players in the pheromone market. Pheromones are naturally produced substances released by animals, but insects in particular, that can influence the behaviors of other animals or insects of the same species.
“There are 70 percent fewer synthetic chemicals in the farmer’s tool box than there were 10 years ago,” said Robert Appleby, co-founder and joint chief investment officer, ADM Capital. “With increased regulation, especially in Europe, we are likely to have 70 percent less in three year’s time. Pheromones represent an effective substitution in a world drowning in chemicals.”
Using biomimicry, M2i leverages its knowledge base and experience with fine chemistry to research, formulate, produce, and distribute a large portfolio of more than 60 pheromone products from 19 patent families, that can biologically protect against the most common pests, affecting both broad acre crops such as corn and cotton, and specialty crops such as apples, tomatoes, bananas, and vineyards.
Highly targeted to specific pests, M2i’s products are harmless to existing biodiversity, reflecting a potential suite of new tools for growers that are environmentally and ecologically friendly. It is this potential that is making biological inputs a category that is garnering increasing investor attention and ever-growing capital commitments.
“Pheromone use as an alternative to traditional chemicals has large growth potential driven by market and regulatory forces,” said Alastair Cooper, head of venture capital for The Cibus Fund. “The plant protection market is currently US$26 billion of which pheromones will represent 30 percent by 2030.”
Plant Health and Nutrition (including biologicals) have raised the most equity capital of all the segments, totaling $2.1 billion since 2014, according to John Campbell, managing director of Ocean Park, a boutique investment bank, and speaker at this year’s AgTech Nexus USA. In his recent GAI Gazette article: AgTech: Investment Trends to Watch in a Blooming Industry, Campbell highlights biologicals, including biopesticides, bioherbicides, and soil biostimulants, with particular interest. “In this class, we see fewer seed-stage rounds and increasing size of later-stage rounds,” he said. “Fully 40 percent of the Plant Health and Nutrition investment category have been for biologicals…”
This trend was reflected during AgTech Nexus USA in Chicago this July, when a new $75 million partnership was announced between Joyn Bio and NewLeaf Symbiotics, that will give Joyn Bio access to the extensive library of proprietary, highly-characterized strains of plant colonizing microbes provided by NewLeaf Symbiotics, and will result in new levels of innovation and sustainability for modern agriculture.
For M2i, its goal is to achieve world leadership standing in the global biocontrol sector. The capital from this round will be used by the company to strengthen its equity base, and to develop its growth strategy by expanding its product range and geographic presence.
“We are extremely pleased to welcome such high caliber new partners into M2i’s investor base,” said Philippe Guerret, CEO, M2i Life Sciences. “This EUR60 million transaction, led by ADM Capital, is a key step in our development. We now have all the necessary tools to position ourselves as a world leader in the biological protection of plants and crops.”
– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com
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