Agribusiness firm launches PE operations

Recently renamed Continental Grain has launched a private equity group, led in part by Quadrangle co-founder David Tanner.

Continental Grain, formerly ContiGroup Companies, has launched Arlon Group, an alternative investment division that will manage investment activities unrelated to Continental Grain’s legacy agri-business operations.

Arlon Group is comprised of three units: private equity direct investment arm Arlon Capital, long/short and commodity futures hedge fund Arlon Opportunities Investor and endowment-style fund of funds manager Arlon Asset Management. Arlon Group is the result of a reorganisation and formal structuring of the company’s prior investment arm, ContiInvestments, which engaged in a similar mix of investment activities.

David Tanner

David Tanner, a member of Arlon’s three-person investment committee, stresses that “the big advantage the direct investment business brings to the table is investing from a permanent base of capital”. He declined to disclose total assets under management.

Tanner became a vice president at ContiInvestments in late 2006, after leaving New York-based investment firm Quadrangle Group, which he helped found. Along with Tanner, Arlon’s investments are overseen by Continental Grain chairman and chief executive Paul Fribourg and Continental Grain chief financial officer Michael Zimmerman.

Much like Warren Buffett’s Berkshire Hathaway, Arlon Capital’s mandate allows it to make investments with an indefinite holding period.

“When we meet with management, we don’t always have to talk about how we are going to exit, which makes for a much more partner-like relationship with them,” says Tanner.

The big advantage the direct investment business brings to the table is investing from a permanent base of capital.

David Tanner

Arlon Capital seeks to make investments of $5 million to $100 million in companies ranging from expansion stage to buyout but will not engage in venture capital. It will target industries including consumer products, financial services, food and agribusiness and media and communications.

Arlon’s investment mandate does not include seeking synergies with Continental Grain’s activities being that Arlon Group was “created, in part, to allow Continental Grain to diversify away from its existing business focus”, Fribourg explains.

Arlon Capital will target investments in North America, Europe and China. It plans to leverage Continental Grain’s experience in China, where the company has maintained a presence since 1979, when it opened the first foreign-owned feed mill in Chinese history in a joint venture with Thailand-based conglomerate Charoen Pokphand.

Each unit of Arlon Group, currently investing solely on behalf of Continental Grain, is set up with the ability to accept outside capital. Tanner notes that each unit can make the individual decision to accept outside capital in the future. However, the direct investment group will only consider raising money from “like-minded investors, so that the unit can maintain its competitive edge”.

Continental Grain was established as a grain trading firm in 1813 in Arlon, Belgium, after which Arlon Group is named. Today, the firm participates in agribusiness, agri-investments and other investment activities.