Strategic Investment Strategy in Food Sector Transformation
In the realm of sustainable investing, the Triodos Organic Growth fund stands out as a pioneer, focusing on the food transition by supporting organic and sustainable food businesses across Europe. Since its inception in 2014, the fund has invested approximately €60 million in 12 companies across eight countries, demonstrating a commitment to long-term, impact-driven growth.
The fund's approach to investment, known as patient capital, is particularly relevant for sectors like sustainable food and agriculture, where long-term thinking and significant upfront investment are essential for meaningful impact. This strategy allows companies to execute their growth strategies, innovate, and scale their impact without the pressure of immediate returns.
The Triodos Organic Growth fund's investment themes include organic and regenerative agriculture, sustainable food innovation, food technology, and the circular economy. By prioritising businesses involved in organic farming, distribution, and retail, as well as companies that develop new products, packaging, or services that promote health, reduce waste, and improve access to sustainable food, the fund is driving the transition to more sustainable food systems.
The fund's investment team members are actively involved in the governance of the companies they invest in, sitting on the boards and bringing their network and experience with impact and governance. This hands-on approach allows the fund to connect different portfolio companies, ensuring good representation in terms of impact, finance, governance, and business experience.
The fund's investor profile is a balanced mix of institutional and qualified private investors. Typically, the fund takes investments of €2 to €9 million, with a minimum ticket size for investment of €250k, and an institutional share class having a minimum holding amount of €10m. The fund currently has 10 holdings with a value of €45 million.
The Triodos Organic Growth fund targets an Internal Rate of Return (IRR) of eight per cent net of costs. While specific numeric targets may vary, similar funds in the sustainable food and agriculture sector aim for moderate financial returns (often in the low to mid-teens IRR range) while prioritising measurable environmental and social outcomes.
The fund's exit strategies are designed to ensure that the commitment to sustainability and organic principles continues post-exit. Exits may occur through trade sales to larger food industry players seeking to acquire sustainable brands, secondary sales to other impact investors, or, less commonly, IPOs if the company reaches sufficient scale and market readiness.
In August 2020, the fund became a minority shareholder in the Swiss online sustainable groceries platform Farmy, demonstrating its ongoing commitment to supporting the food transition in Europe. One of the fund's investments, HARi&CO, offers a plant-based meat alternative made from beans, pulses, and vegetables, and has the highest nutritional score A on the French 'nutri-score' labelling system, showcasing the fund's focus on health and sustainability.
The Triodos Organic Growth fund is fully invested and inviting new capital from existing and new investors to expand activities and impact. With a flat 2% management fee and a focus on long-term, flexible funding for sustainable growth, the fund offers an attractive opportunity for investors seeking to make a difference in the food transition.
[1] Triodos Organic Growth Fund: A Patient Capital Approach to Sustainable Food Investing, Triodos Bank, 2020. [2] Impact Investing in Agriculture and Food, Global Impact Investing Network, 2018. [3] Triodos Organic Growth Fund: Investing in Organic and Sustainable Food Businesses, Triodos Bank, 2019. [4] Building Resilient Food Systems, Triodos Bank, 2020. [5] Sustainable Food and Agriculture Investment Landscape in Europe, European Investment Fund, 2019.
- The Triodos Organic Growth Fund, a pioneer in sustainable investing, focuses on the food transition by supporting organic and sustainable food businesses across Europe, investing in sectors like food technology, sustainable food innovation, and the circular economy.
- By prioritizing businesses involved in organic farming, distribution, and retail, as well as companies that develop new products, packaging, or services that promote health, reduce waste, and improve access to sustainable food, the fund aims to drive the transition to more sustainable food systems.
- The fund's investor profile consists of a balanced mix of institutional and qualified private investors, with investments ranging from €2 to €9 million, and a minimum ticket size for investment of €250k.
- With a flat 2% management fee and a focus on long-term, flexible funding for sustainable growth, the Triodos Organic Growth Fund offers an attractive opportunity for investors seeking to make a difference in the food transition, while also prioritizing moderate financial returns and measurable environmental and social outcomes.
