The US Department of Agriculture has selected Advantage Capital Partners to manage a $150 million private equity fund focused on investments in agribusiness.
Part of the Made in Rural America Initiative launched earlier this year by US President Barack Obama with officials from the USDA and other federal stakeholders, the fund will focus on growing agribusiness at home and abroad for rural US entrepreneurs. Other groups supporting the initiative include the US Small Business Administration, the Export-Import Bank and US Office of the Trade Representative are supporting the initiative.
Eight limited partners from the Farm Credit System are contributing capital to the vehicle, called The Rural Business Investment Company Fund. The Farm Credit System is a group of borrower-owned lending institutions and specialised service organisations that provide financial services to rural businesses and is responsible for providing $199 billion in financial services to rural America.
Founding LPs include Minnesota-based AgStar Financial Services, AgriBank and United Farm Credit Service; Texas-based Capital Farm Credit and the Farm Credit Bank of Texas; Colorado-based CoBank; Nebraska’s Farm Credit Services of America and Kentucky-based Farm Credit Mid-America.
The founding group of LPs has provided $150 million to begin investing. Advantage has an existing agribusiness focus and track record, and is a nationwide impact investing firm.
“This fits in with our existing background in agribusiness, and our prior involvement in public-private-partnerships,” said Rob Monsees, a vice president at Advantage Capital Partners in an interview with Private Equity International.
The fund will provide growth equity, loans, and debt securities ranging in size from $3 million to $15 million per transaction, but the fund will also partner on deals up to $75 million, Monsees said.
The fund was created out of USDA's Rural Business Investment Program (RBIP) which is part of the initiative. Applications are open for other investment companies to apply to be part of the non-levered program and carry the designation. 75 percent of investments made by an RBIC must go to companies in rural America. The USDA also has plans for a Rural Opportunity Investment Conference slated for later this year, which will match up businesses and investors.