A consortium of investment firms and plant protein industry stakeholders, including Protein Industries Canada, is looking to raise $200 million in equity capital to create a fund that will help finance plant-based food and ingredient processors.
Led by Bellwoods Partners and Champlin Advisory, Protein Industries Canada (PIC) says the consortium will work with an advisory board to identify and break down barriers to raising capital for the next generation of plant-based food and ingredient processors, with the ultimate goal to build a pool of capital specifically for the domestic ingredient processing sector.
It is expected that PIC and its partners will contribute $2.4 million to support the equity fund, with $1.8 million coming directly from the protein supercluster program.
It is estimated that upwards of $27 billion will need to be invested globally to secure value chains and processing capacity to meet the growing demand for plant-based foods in the next years, says PIC. To remain relevant and lead the world in this growing global market, Canada will need to attract and deploy a significant amount of capital.
Bill Greuel, chief executive officer of PIC says Canada is on the cusp of an incredible opportunity when it comes to plant-based foods.
“The global market is expected to surpass $250 billion by 2035. We believe Canada has the opportunity to capture 10 per cent of the market — which would result in the creation of a new $25 billion sector for Canada,” he says. “We have a growing ecosystem of innovative companies who are putting Canada on the map, but one of the biggest constraints to growth is the lack of available capital to help build scaled-up processing facilities. This project will help change that by increasing awareness and building a fund of deployable capital.”
With processing facilities often requiring at least $100 million worth of capital investment, PIC notes the substantial equity component required to fund these new businesses, combined with the longer wait for financial returns and the overall lack of awareness of the scope of the opportunity within Canada’s investment community, makes attracting capital very difficult for Canadian agrifood businesses.
“Canadian plant-protein processors face an uphill battle raising capital –investors are challenged in underwriting these investments despite the growing opportunities in the sector,” CEO of Bellwoods Partners Kyle Scott says. “There isn’t an appropriate pool of capital to support these entrepreneurs – the cheques are large, the individual project and technology risk is real, and there is no such thing as off-take agreements in the industry to help backstop an investment. A potential answer to these challenges is taking a portfolio approach, where a pool of capital is aggregated and spread across different Canadian processors, essentially underwriting Canada’s ability to compete in the plant-protein space.”
An advisory board consisting of subject matter experts, industry representatives and Indigenous leadership will help lead the fund.