colombia crepes waffle

Seizing Colombia’s agribusiness sector opportunity
April 2016
ADMINISTRATIVE MANAGER
FUND MANAGER
CONFIDENTIAL
DISCLOSURES
SEAF is an SEC registered Investment Advisor pursuant to the Investment Advisers Act of 1940.
These materials contain non-public information that is subject to confidentiality obligations, including confidentiality restrictions under
the relevant SEAF partnership agreement and under applicable securities and other laws . Each recipient of this information by
reviewing this information agrees to keep such information confidential and not to use this information for any purpose other than in
assessing such recipient’s investment in the Fund. It should be noted that this material is not and should not be construed to be an
offering of, or a solicitation of an offer to purchase interest in any fund operated by SEAF. Any such offering or solicitation can only be
made via the delivery of an offering memorandum.
It should be noted that investments in SEAF funds are subject to significant risks, including the risk of total loss. Risk factors contained
in the funds’ offering memoranda should be carefully reviewed. Past performance is not necessarily indicative of future returns and
there can be no assurance that any such past or projected performance presented herein will be achieved in the future. All performance
reflects the reinvestment of dividends and other investment income. All information regarding portfolio and geographic exposures are
subject to change. Actual results for unrealized investments may differ materially from those indicated in these materials.
Unless otherwise noted all performance does not reflect the deduction of advisory fees and organizational expenses. As such, it should
be noted that actual performance will be lower. Investors' returns will be reduced by advisory fees, which are described in Part 2A of
SEAF's Form ADV. For example, a $1 million investment with a 10% annual return and a 10% one time fee (investment 1) will produce
lower returns for investors than a $1 million investment with a 10% annual return and no fee (investment 2).
The use of model results does not represent actual investments and may not reflect the impact that material economic and market
factors might have on SEAF’s decision-making when SEAF is actually managing the money of its investors. Actual investment results
may vary materially from those portrayed in the model.
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SCAF is an unparalleled fund to seize the growing agribusiness opportunity in Colombia
Agribusiness is
an attractive
investment
sector
Opportunity
and timing
are excellent
to invest in
Colombian
Agribusiness
• Global demand of food is growing faster than supply - the world will require almost twice as much food by
2050, firming price pressure and making agribusiness a defensive asset class
• With improvements in productivity, Colombia can increase import substitution and become an exporter of food
• Due to decades of conflict, low investment along the value chain and poor policies, Colombia’s agribusiness is
under-competitive and fragmented, resulting in low yields, high costs, limited access to markets, and poor
economic and social development
• However, Colombia has remarkable comparative advantages and potential for agribusiness (ranked #7 world
pantry potential by FAO): exceptional natural resources and strategic location for access to global markets
• The three main barriers to competitiveness in agribusiness are rapidly declining: internal conflict controlled
(Colombia is entering a new era: the post-conflict); deploying over $25 billion in infrastructure investments;
new progressive government policies for agriculture and rural development: Ley Zidres, Plan Colombia Siembra
• With over 48 million people, and a GDP of $408 billion, Colombia has the 3 rd largest population and 3rd largest
economy in Latin America
Colombia
offers attractive
conditions
for investors
• Vigorous marketplace for higher consumption of agri products: 70% is urban, important and growing middle
class (31% of population), outstanding reductions in poverty (28%) and unemployment (7.8%)
• With 4.8% GDP average growth (2010-14), and 3.2% expected for 2015 and pick-up thereof, Colombia has
been one of the most stable and fastest-growing economies in Latin America. Exchange rate now competitive.
• Investment grade rating and Stable/Positive Outlook by Standard & Poors´, Moody´s and Fitch Ratings
• Ranked #3 in Latin America by World Bank in Doing Business and #1 in Investor Protection
• Longest-standing democracy in Latin America, solid institutions and rule of law
The right team
• SEAF has more than 25 years of experience in private equity fund management, including over 10 years in
Colombia, deep experience globally in agribusiness, and a wide and relevant network
• Robust local Fund Management team and Advisory Committee team combining over 100 years of
experience in agribusiness, private equity, consulting and entrepreneurship in Colombia and region
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Note: 2014 data (or 2015 when available)
SCAF´s compelling investment strategy is geared to achieving superior returns with
social impact
Triple bottom-line returns
Investment objectives and strategy
• Invest significant minority equity interests in growth stage small
and medium enterprises (SMEs) in Colombia’s agribusiness value
chain (not focused on primary agriculture production; no land
purchase) and use $3 million grant facility from USAID to help
investments accelerate growth
Financial
Social
• Focus on SMEs that have a positive impact in under-served rural
areas, and impacting minority/vulnerable population
• Focus on value chains in sectors where Colombia has
comparative advantages, including cacao & chocolate, fruits &
vegetables, aquaculture, dairy, animal protein, feed, biotechnology, grains
Environmental
• Target Net IRR: >15%
• Generation of sustainable direct/indirect jobs
Inputs and
Production
• Seeds
•
•
•
•
Post harvest
and processing
• Post-harvest
Crop protection processing,
sorting
& Fertilizers
• Value-added
Irrigation
processing
Farm machinery
• Packaging
Ag. Services
Logistics
• Temperature
controlled
transportation
and storage
• Efficient
transport
and/or logistics
• Information
and tracking &
traceability
systems
Market
• Reduction of poverty; improvement of quality and
value per peso of food for the Colombian market
• Market access
solutions
• Environmentally/socially responsible businesses
• Food service,
wholesale,
retail solutions
• Contributing to peace and the sustainable
development of rural Colombia, and provide local food
for less than imported goods
• Organics or
other high
value niches
• Cooperation with existing NGOs and producer groups
to leverage rural communities’ experience
• Export to region and world of high quality food
SCAF is SEAF´s third fund in Colombia, with target size of $70 million. $28 million (including up to $3 million
from SEAF) has been raised from USAID and OPIC, along with $3 million for technical assistance
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With removal of the main barriers to competitiveness (conflict and poor infrastructure),
it´s an excellent time to invest in Colombian agribusiness
The Colombian paradox:
Uncompetitive agribusiness despite
privileged potential…
… but, extraordinary progresses in minimizing the main barriers
1. End of conflict
Colombia yields 2013
Avocado
Milk
Yucca
2
6
10.5
Pineapple
Cacao
Corn
0.4
1.7
1.5
Colombia roadway network under
concession: existing and upcoming
Violent actions
Deaths in conflict
MT/ hectare/year (or lt/cow/day)
9.5
2. Infrastructure development
Col. average
Col. benchmark
Existing roads
4G projects
20.3
25.4
37.9
85.9
7.5
Gap in production costs between average and
benchmark ranges between 2.5 and 17 times
Sources: Agronet, MDADR, Alquería, DNP, Fedesarrollo
1990
2012
• A 50-year long conflict has caused
6.8 million victims (especially in
rural areas), and affected economic
and social development
• Colombia is #7 in FAO´s ranking of potential to
become world pantry in next decades
• Average of 3% of GDP per year has
been spent in conflict in last decade
• Colombia´s natural resources are a remarkable
comparative advantage for agribusiness:

Water: 3rd largest country in water
resources. Rainfall average: 3,000 ml/year
• Peace talks with FARC and ELN
making good progress. A likely final
settlement, will engage Colombia in
a new era of opportunities and
development: the post conflict era.

Arable land: using in agriculture only 15% of
the 46 million hectares of arable land.
• As a result, GDP expected to grow
additional 100 bpp per year

Climate, biodiversity
• Due to poor infrastructure, it
currently costs more to
transport a ton from Bogotá to
Barranquilla than from Asia
• Unprecedented investments
and progress in improving road
infrastructure: US$25 billion
• Additional similar investments
in progress for secondary roads
Sources: GMH/CNMH “Ya Basta” – Jul 2013, Centro de Recursos para el Análisis de Conflictos – CERAC, CINEP, Semana, Oxfam, Global Water Partnership, Censo
Agropecuario Colombiano 2015
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Led by experienced Colombian Agribusiness professionals and supported by SEAF,
the pioneering global PE firm with more than 25 years’ experience in investing in agribusiness
Fund Management team (to date)
Managing Director
Director
Mauricio Samper
Robert Vodicka
• Cargill Foods Colombia, Manager &
Business Development
• Valores Bavaria companies, CFO - COO
• McKinsey & Co, business consultant
• Entrepreneur in agribusiness
• Stanford Business School
• SEAF Senior Executive: Corporate Bus.
Development and Communications
• 10 years of experience in launching SEAF
funds, investment and operational
support to funds world wide.
• Kellogg, MBA
Local and Global Investment Committees members (LIC and GIC)
LIC
Julio Manuel Ayerbe
• SEAF Investment
Committe
• Board Scotiabank
Colpatria
• CEO of Corfivalle, 40+ years
of managerial experience
LIC
Jorge Steiner
• Agribusiness
entrepreneur
• CEO of Proficol
Andina
• Board of Adama Andina
• UC Davis, Agri-Economics
LIC
Carlos Enrique Cavelier
• CEO Alquería
• Board member
of The Food
Bank of Bogotá
• Passionate philanthropist
• Harvard KSG, MPA
LIC
Rubén Darío Lizarralde
• CEO of Campetrol
• Minister of
Agriculture
• CEO Indupalma
• Board of Corpoica, Fedepalma
• Agribusiness entrepreneur
GIC
Bert van der Vaart
• CEO and Executive
Chairman of SEAF
• Structured all
SEAF funds
• 400+ investments worldwide
in 20+ years
Gary GIC
Dodge
• Manager SEAF´s
Flex Fund
• SEAF GIC member
LIC
Rafael Mejía López
• President of SAC
• Board of Finagro,
FAO (GAAP), SENA,
Bolsa Mercantil,
INCODER, Consejo Gremial
• Agribusiness entrepreneur
GIC
Richard
Russell
• COO of SEAF
• SEAF GIC member
Vipul GIC
Mankad
SEAF GIC member
and Global
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Investment Officer
SEAF is the pioneering global Private Equity firm leader in impact investing
SEAF is an investment management group with over 25 years of track record providing growth
capital and business assistance to small and medium enterprises (SMEs) in emerging and transition
markets underserved by traditional sources of capital, delivering social impact and financial returns.
•
•
•
•
•
•
35 funds raised and managed in 26 countries
US$700 Million in committed capital
US$380 Million invested
More than 70 global investors
13 CEED centers
385 investments made, 237 realizations
- 70% have women in senior roles
- For every $1 invested, $13 of value
• 40,000 jobs created and maintained
- 79% for unskilled
- 20% average annual wage growth
- 87% receive receive wealth and pension
SEAF has been backed by leading Development Finance Institutions, Institutional and Private Investors, Foundations and
Philanthropic Organizations, who trust SEAFs ability to work in challenging environments and execute specific strategies
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Over one third of SEAF’s investments over 25 years have been in the agribusiness space
world-wide
Over the past 25 years, SEAF has made more than $130 million worth of investments in more than 100 enterprises,
including farm stores, dry and cold storage facilities, technologically advanced processing centers, wholesalers, and
retailers across 20+ countries, both out of its general funds and from dedicated agri funds in India, Tanzania, and
Georgia.
SEAF has exceptionally broad experience making investments across the food and agribusiness value chain,
including in sectors such as seeds, processed fruits and vegetables, meat, poultry, dairy, beverages, pesticides,
fertilizers, food storage, logistics, retail, and services.
SEAF works with agri- SMEs to improve operational efficiencies, formalize corporate governance and business
operations, adjust to climate change, and increase market coverage across all SMEs, while utilizing our collective
capacity and network expertise to assist agribusinesses with their sector focused needs.
Agroaromas – Colombia
An investment in the
producer/distributor of organic
herbs helped Agroaromas to
gain export markets in the USA
as “Infinite Herbs” with
significant sales and
employment gains
Sunshine Mango – Peru
SEAF’s investment allowed the
company to grow to one of Peru’s
largest mango and avocado
exporters, significantly increasing
employment, and providing
substantial impact to the Piura
community
Abhay Cotex – India
Since SEAF’s investment, the
company has more than
quintupled its sales of its
environmentally friendly and
reasonably priced protein meals.
Now negotiating a license of
technology to Tanzania
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The following agribusinessess in SCAF’s pipeline have developed unique competitive advantages,
and offer remarkable growth opportunities for attractive financial returns and social impact
PC 1
• Largest producer of fresh and processed
pineapple in high-tech industrial process
for exports and local market
• Employs 35 times more people per
hectare than region’s main crop
PC 1
• Leading producer of quinoa ingredient
for industry and retail exports and local
markets
• Originates from small farmers helping
them substituting illegal crops
• Processor, packager and distributor of
fresh vegetables and fruits for local
food service sector
• Provides technical assistance and fair
trade conditions to small farmers
• Producer of healthy packaged snacks for
local and exports markets
• Founded and ran by two sisters focusing
on employing single mothers
PC 1
PC 1
• Leader in Colombian production, processing
and commercialization of fresh tilapia to the
local and exports market
• Offers employment opportunities to reintegrated guerrilla/paramilitary members
PC 1
• Leading processor of frozen (IQF) tropical
fruits, mainly to exports markets through
Chilean partner’s distribution network
world-wide
PC 1
• Leader grower of cacao and processor of
cacao ingredients for exports
• Provides technical assistance and fair
market conditions to small growers
• Leading national player in the production
and distribution of branded packaged nuts
and snacks to local retail and exports
• Originates from small local nuts producers
with fair trade conditions
• Bio-technology company that develops
plant-based/ organic crop protection
products with increased effectiveness
and sustainability by reducing the use of
toxic substances and fossil energy (CO2)
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Example of Investment Opportunities matching SCAF criteria:
Tilapia: integration, consolidation and export
Company profile summary
Opportunity
• Family business for 25 years, produces,
processes and markets fresh tilapia fillets
for domestic and export sales
• Demand for fresh (refrigerated, not frozen) tilapia fillets has had an
important growth in markets, taking share from and with a price
premium over frozen or whole fish
• Son educated in US, took over
management 5 years ago, and has boosted
sales and margins with improvements in
management, operations, aquaponics,
new products and exports market
• S-W Colombia cluster has comparative advantages for fresh tilapia
production, using Colombia’s cut-flower industry refrigerated
logistics infrastructure for export
• Located in an
aquaculture
cluster in S-W
Colombia, area
heavily affected by
conflict (former
guerrilla mountain
range corridor)
• Bogotá
• With capital investment, improvement of processing facilities and
industry consolidation in cluster to meet growing demand in North
America and locally and take share from less competitive current
suppliers (Asia)
• Potential to multiply value by developing value-added product
(processed and ready to cook/consume fish), shortening the supply
chain, introducing world class genetics and improve and expand
processing capabilities and market reach (currently Florida)
• Significant and sustainable direct and indirect job creation in
post-conflict region (re-incorporation of former guerrilla
members), with training improving productivity
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Example of Investment Opportunities matching SCAF criteria:
Bio-technology crop protection for local and exports markets
Company profile summary
• A bio-technology Colombian company that develops plant-based/
organic crop protection products with increased effectiveness
and sustainability by reducing the use of toxic substances and
fossil energy (CO2).
• Established in 1998, the company has proven superior technical
know-how, scientific expertise, world-class innovation network,
go-to-market capabilities with exclusive certified supply chain,
and international distribution network developed with JV with
global leader in crop protection solutions
Opportunity
• Large and fast-growing market: global bio-pesticides
market is growing fast due to increasing resistance of
plagues to synthetic pesticides, stricter regulations and
consumer concern for food safety and toxicity:
‒ Bio: $1.6 Bi in 2009 to $3.3 Bi in 2014 (15.6% CAGR)
‒ Chemical: $41.2 Bi in ‘09 to $48 Bi in ‘14 (3.3% CAGR)
• Owns patents for its products which it currently distributes in
Colombia, Perú, Costa Rica and Ecuador. It has also been granted
validation in 5 continents and received approval from Chile,
Mexico, and US Environmental Protection Agency
• Two manufacturing facilities (industrial extraction and
formulation plants) designed and built to assure product
standardization and safety.
• International competitiveness, through technology transfer from
partnerships with R&D agencies and international universities
• Clear comparative advantage: raw materials sourced
from Colombia´s rainforest biodiversity (Colombia is
world # 1 in vascular plant diversity).
• Multidisciplinary team combining top expertise in science
and innovation: chemistry, biology, ethnobotanics,
agroeconomics, entomology, phytopahtology, toxicology.
• Track record: over 100,000 Has treated in last 5 years,
products licensed and proven in over
60 plant species in 20 countries.
Sales grown at 17% CAGR since 2006.
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Example of Investment Opportunities matching SCAF criteria:
Food processing and distribution company
Summary company profile
• The company: A privately-owned company founded in 2012.
• Business model: Using specialized technology, the Company adds tailor made value to
fruits and vegetables (selects, disinfects, cuts and packages) and delivers them to its food
service clients in Bogotá, ready to consume.
• Value proposition and products: It’s a one-stop solution for clients’ need of fresh fruits and
vegetables, saving them the cost and effort to procure, select, wash/disinfect, process and store
food. Other benefits include food security, traceability, reduction in food waste, inventory
management, tailor-made cuts, efficient delivery to POS.
The products include fresh-cut vegetables, fresh-cut tubers, and fresh-cut-ready-to-eat salads.
• Client base: The Company reaches 50% of main restaurants, restaurant chains, hospitals,
schools, and catering companies in Colombia: Subway, Taco Bell, Burger King, Crêpes & Waffles,
El Corral, OMA, La Recetta, Horacio Barbato, 80 Sillas, Central Cevicheria, Lina’s, several
boasters, Gate Gourmet, others.
• Financials and operations: Sales (Budget 2015): $5.2 MM, 133% CAGR (13-15), EBITDA Margin
(Budget 2015): 7%, 70 employees, one processing plant
Opportunity: large market, high growth
• Unsatisfied and growing demand
• The fruit and vegetable market in Colombia for
food service is over $900 million, with an 18.9%
CAGR in the last decade.
• Increase penetration in food service sector
• Geographical expansion (local and exports)
• Increase product portfolio offering.
• Expand to service nationally
Social impact
• The Company has established supply agreements with great
number of selected small farmers, offering them fair market
prices, futures contracts (very rare in Colombia), and training.
• The Company provides technical assistance to maximize yields
and quality, optimize cost structure and the usage of Ag Best
Practices
• The small farmer families associated with the Company are being
included in the agribusiness value chain, enabling better and
sustainable jobs, and technology transfer.
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