Wednesday, September 23, 2020

Agrifoodtech has ‘captured the retail investor’s imagination,’ says BlackRock fund manager

"Capturing the imagination" may be a bit much but he's right that folks seem more open to the pitch.
Now electric vehicle companies, particularly those without a product, merging into a SPAC-in-a-box, those seem to have captured the retail investor's imagination.

From AgFunder News:
With $7.4 trillion in assets under management at the end of last year, BlackRock is often said to be the biggest investment business in the world. And lately, it has been turning more of its attention to foodtech.

The New York-based firm launched an ag-focused fund, BGF World Agriculture, in 2010. The $100 million vehicle was tasked with investing in areas such as agrochemicals, farm equipment, ‘soft’ commodities, biofuels, and arable land.

Ag is by no means the sector in which to make a quick buck. For BlackRock’s dedicated fund, returns and growth alike were lower compared to other areas, while reliance on commodity prices meant heightened uncertainty for the fund and its investors.

Seeking a smoother ride and better prospects, last March the BlackRock team decided to broaden the fund’s remit to a more generalized human nutrition theme. This repositioning loosely coincided with BlackRock adopting a more vocal commitment to sustainable investing – as well as Covid-19 and the myriad food supply chain issues it has thrust into the spotlight.

In his annual open letter to the world’s CEOs back in January, BlackRock chairman Larry Fink said the firm would henceforth put sustainability at the center of its investment decisions.
“Our investment conviction is that sustainability and climate-integrated portfolios can provide better risk-adjusted returns to investors,” he wrote. “And with the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward.”

The firm will no longer invest in companies that “present a high sustainability-related risk,” he added.
Nevertheless, BlackRock’s sustainability shift has faced difficult questions from some quarters; its ESG-aligned funds have been claimed to be among the worst for deforestation risk, while it has also been criticized for apparently leaving livestock out of the new global warming policy it adopted in July. Whichever way you look at it, the firm still has work to do to in order to convince some that it’s now firmly on the sustainability path.

Heading up BlackRock’s renamed BGF Nutrition Fund is London-based David Huggins, vice president and nutrition portfolio manager, active equities, at BlackRock.

Huggins is appearing at this week’s virtual Future Food Tech Summit, where he’ll be joining a panel with Tyson Ventures managing director Erin VanLanduit, Cultivian Sandbox managing director Nick Rosa, Peakbridge Partners managing director Nadav Berger, and TechCrunch editor Jonathan Shieber to discuss agrifoodtech investment in the midst of Covid-19. You can still sign up to attend the fully online event here.

In the meantime, AFN caught up with Huggins for a Q&A before he takes the virtual stage.

AFN: How has Covid-19 impacted foodtech investment as a whole in 2020?
David Huggins: The structural trends regarding foodtech investment have not changed as a result of Covid-19. What we have witnessed is an acceleration in the trends which were already in place.
Risk appetite has broadly returned to pre-pandemic levels. There are pockets of extreme exuberance in certain areas which offer very high growth and have captured the retail investor’s imagination with a great story.

Which agrifood-related technologies have experienced an acceleration of adoption, and have potentially become more lucrative investment opportunities?
Technologies that offer consumers excellent convenience are seeing an acceleration as a result of the pandemic. Anything related to food delivery — such as takeout, meal kits, online grocery — is seeing a continued surge in demand. This is an extremely attractive setup for companies providing these kinds of tech-enabled services: customer acquisition costs have fallen, order rates are rising, and so growth projections are being truncated. Hence, for many of these well-operated foodtech companies, their outlooks are looking even better.

Additionally, through the food chain, there are some other, less obvious businesses benefiting from this. Foodtech companies providing solutions which reduce labor intensity in traditionally labor-intensive food manufacturing, for example, are seeing their services in greater demand....