Sustainability within the food value chain is a business imperative

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Power Corp. of Canada buys Lios Partners to create new agri-food private equity fund

March 30, 2022

The Globe and Mail | Andrew Willis

Power Corp. of Canada POW-T (+0.36%increase) wants to put a healthy meal on your plate.

The Desmarais family-controlled asset manager launched an agriculture and food-focused private equity fund on Wednesday, adding a new platform to its $4.2-billion Power Sustainable division. This unit of Montreal-based Power Corp. already invests in renewable energy and decarbonization businesses.

The venture sees Toronto-based agri-food fund manager Lios Partners and Power Corp. join forces to create a new asset manager, Power Sustainable Lios, that will raise a $300-million fund. Former McCain Foods and OMERS private-equity executive Jonathan Belair founded Lios Partners last year.

Power Sustainable Lios plans to invest in midmarket food businesses – companies with up to $150-million in annual revenues – focused on delivering sustainable products and technology. The fund is targeting investments from $25- to $50-million, backing entrepreneurs or management teams buying out company founders.

In an interview, Mr. Belair said there is a consumer-led structural change playing out in the food industry, with shoppers putting a premium on healthy eating. “Many sustainable agri-food companies have globally scalable businesses, yet they are held back by a lack of capital,” he said.

At McCain, Mr. Belair oversaw investments in plant-based protein businesses and ventures such as TruLeaf, a Nova Scotia ag-tech company that grows produce indoors using vertical-farming technology.

The Power Sustainable Lios executive team also includes Craig Hanna, formerly at natural-foods company SunOpta Inc., and James Rickert, a lawyer and veteran of Brookfield Asset Management Inc.

“By partnering with this accomplished team, we gain significant industry expertise and build on shared values to support the next generation of companies leading the transformation of our global food system,” said Olivier Desmarais, chief executive officer of Power Sustainable, in a press release. “Together, we will tackle some of the industry’s most pressing social and environmental issues, while aiming for attractive risk adjusted returns,” he said.

Power Corp. has $240-billion of assets under management and a global portfolio. Mr. Belair said the agri-food fund will initially focus on North American investments, while using the parent company’s reach in Europe and Asia for future expansion of both the fund and the businesses it owns.

Power Sustainable Lios backers include two Canadian banks and a number of pension plans, along with wealth management firms catering to ultra-high-net-worth families, Mr. Belair said. The new fund is being launched as institutional investors step up their commitment to specialized agri-food businesses, according to a recent report from San Diego-based Finistere Ventures, which covers the sector.

Global investment in agri-food companies with a technology focus totalled US$22.3 billion in 2020, and commitments to the sector are growing at a 50-per-cent annual clip, according to Finistere co-founder Arama Kukutai.

“Agri-food tech has attracted rising attention in recent years as a potential proxy for sustainable investing – especially around reducing the impact of climate change,” Mr. Kukutai said in a report. “The race for innovation access is heating up and creating an exciting stage for agri-food investing as we move into the next decade.”

Power Corp. controls one of the country’s largest insurers, Winnipeg-based Great-West Lifeco Inc. GWO-PR-Y-T (+0.26%increase), and mutual fund manager IGM Financial Inc. IGM-T (-0.20%decrease), along with private-equity fund manager Sagard, which oversees $11-billion of client assets.

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