M&G Targets Regenerative Agriculture

Amanda Cheesley Deputy Editor 8 March 2024

M&G Targets Regenerative Agriculture

As the move towards a sustainable food and agriculture grows, London-headquartered M&G Investments has made a new investment in regenerative farming to help drive environmental changes in sustainable production in Europe.

M&G Investments has just announced a €150 million ($163.5 million) commitment to the Regenerate European Sustainable Agriculture Fund, managed by specialist climate impact investment managers, Regenerate Asset Management.

Founded in 2019, Regenerate’s vision is to transition agriculture towards sustainable, natural ecosystems which positively impact people and the planet, the firm said in a statement. Regenerate’s fund seeks a long-term positive climate impact in Europe whilst offering clients exposure to an asset class that can provide diversification, returns and protection against inflation.

The €150 million investment has been made by M&G’s £5 billion Catalyst strategy, which was launched in 2021, the firm said. The Catalyst team manages a £5 billion purpose-led flexible private markets' mandate on behalf of the £126 billion Prudential With-Profits Fund, which includes PruFund. These savings are being used to meet the rising global demand for capital from innovative, responsible businesses which are currently underserved by providers of institutional finance, the firm continued.

Regenerate’s European Sustainable Agriculture Fund will invest €40 million into the growth of a diversified Portuguese blueberry enterprise – Regen Blue. The investment will expand the approach of Regen Blue’s two current enterprises into regenerative practices, improving soil health and biodiversity, whilst scaling the business to contribute to the economic growth of its local communities. Future investments by the fund will focus on the build-out of a network of regenerative farms across Europe to take advantage of the growing demand for other types of sustainable produce.

The firm estimates that Europe’s total blueberry market is expected to grow at 6.9 per cent a year, from $8.8 billion today to $12.4 billion by 2029. Europe is a net importer, but is stepping up production volumes to meet growing consumer demand, supported by a favourable climate, agricultural resources and an established market infrastructure, the firm added.

As a major contributor to global emissions, the agricultural industry and modern farming techniques have degraded soil quality and its capacity to absorb and retain greenhouse gases, the firm continued.  About 33 per cent of the earth’s soil is already degraded and more than 90 per cent could become degraded by 2050, equivalent to one football pitch of soil being eroded every five seconds. This in turn has accelerated an increase in the use of chemical fertilisers and pesticides, depleting soil makeup and negatively impacting biodiversity and human health.

By rethinking the ecosystem, regenerative farming and grazing practices aim to reverse climate change by rebuilding and restoring soil biodiversity resulting in carbon drawdown (sequestration) and an improved water cycle.

“Regenerate’s mission aligns perfectly with our objectives to invest where we can make the biggest difference – and in this case the end goal is sustainably produced food,” global head of investments, M&G Catalyst, Niranjan Sirdeshpande, said. “Our investment will enable Regenerate to add value through regenerative agriculture in a way that looks to generate market rate private equity returns for investors, while also targeting positive science-based environmental impact on the planet,” Sirdeshpande continued.

“Regenerative agriculture isn't just about carbon – it looks at the whole health of our planet.  Our farming investments reduce carbon dioxide but they also improve biodiversity and restore the soil's health so it is better able to absorb the sun's energy,” Ben Stafford, CEO of Regenerate, added.

“Our first deal in Portuguese blueberry farming is the perfect illustration of this. We will expand operations and layer new approaches to production which will boost the quality and productivity of the soil, minimise costly external supplies such as fertiliser and ultimately create a circular farming business,” he said.

“The size of the opportunity cannot be underestimated. This is our first acquisition, from a significant pipeline of live deals. Our first fund is targeting €250 million but given agriculture is the world’s largest industry, we believe the opportunity is much larger and we’re excited to be one of the first to pioneer this approach in the European market,” Stafford added.

This news service is covering agriculture, forestry and food production and related businesses when population pressures, wars, supply chain disruptions and the impact of new technologies have shaken up the space. See more here and here.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes