Food & AgTech perspective

During 2022, we continued to build on our commitment to invest into and support entrepreneurs and businesses who are reshaping how food is  produced, distributed and consumed  to improve human health, environmental sustainability and to make farming and food production economically viable.

Committing a total of £111m (2021: £81m) into new and existing portfolio companies, our portfolio value is now £468m (2021: £364m), across 28 companies.

To protect the commercial sensitivity  of the businesses in which we invest, and given their wide spectrum of maturity, we do not publish aggregated financial performance metrics.

The food and agtech sector has not been immune to recent economic setbacks, however the forces of inflation, rising interest rates, decreasing valuations and rates of investment have affected our companies in differing  ways. Companies with significant revenues that are at or near profitability have fared reasonably well, even if valuation multiples have declined.

Companies seeking to finance large R&D budgets or build large-scale new facilities have found capital shortages to be more severe.

Against this backdrop, we continued to support our most promising portfolio companies with additional capital but chose not to commit new funds to companies facing more fundamental challenges.

Among our portfolio, four companies stood out last year for their ability to attract new investor funds that will help support the scaling up of their operations and achievement of key milestones that will deliver substantial commercial growth.

Ostara, a producer of efficient, waterway-friendly phosphate fertilisers that release nutrients naturally in response to plant demand, raised £58m in a Series C funding from new and existing shareholders at a substantially higher valuation. The funds are being used to complete construction of a new manufacturing facility in St.

Louis, Missouri, in the US, enabling  the company to produce 250,000 tonnes of fertiliser per year. Ostara was formerly wholly owned by Grosvenor who acquired the business in 2020.

TemperPack, a leading manufacturer of sustainable plant-based packaging alternatives to polystyrene and bubble wrap, closed a £116m fundraise to expand its production capacity to meet growing demand and grow its geographic footprint. It has also expanded its product range through the acquisition of KTM Industries, a company with complementary starch- based products.

AeroFarms, the commercial leader in fully controlled indoor vertical farming, opened its new facility in Danville, Virginia, in the US which, when fully operational, will be the world’s largest aeroponic smart farm. This expansion means AeroFarms’ award-winning micro greens are now available across the  US through the company’s relationship with Whole Foods. The company also expanded its activities in the Middle East through the opening of an R&D centre in the UAE, the announcement of a joint venture to build farms across the region and the closing of an investment from Qatar to support both AeroFarms’ operations and build farms locally.

Oxbury Bank – the UK’s first and only bank dedicated to the agtech sector – successfully raised equity from new and existing investors bringing the total capital raised to £77m. The business has broken even just two years from launch, is on target for a full year of profitability  in 2023 and to exceed £1bn in lending by 2024, at least 50% of which will assist farms to transition to more climate- friendly production.

Regrettably, 2022 saw Enterra, a sustainable producer of feed ingredients used in aquaculture and livestock rearing, stop trading. For all our efforts to fund and support the management team, Enterra was unable to attract the significant new amounts of capital it needed to finance its next stage of growth.

Purfresh, whose technology preserves fresh fruit in global transit, suffered from supply chain issues beyond its control, in particular container ship delays, making its businessmodel unsustainable. Theproven, ozonetechnologyand IPhasbeenacquired by a new company, Purfresh Clean, which will focus on non-food and agtech sectors.

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