KKR backs Australian agribusiness specialist
KKR has committed at least $100 million to Sundrop Farms Holdings, an Australian agribusiness company that has developed technology for growing crops in arid climates.
The capital - which will be deployed at holding company and project level - has been earmarked for the expansion of Sundrop's existing glasshouse facility in South Australia as well as taking its technology overseas. The company is targeting the Middle East, North America and other supply-constrained markets.
Sundrop claims to be the only company in the world with the technology and know-how to develop and operate greenhouses in locations that have little or no access to arable land, fresh water sources, or grid energy. Its greenhouse system - reliant on just sunlight and seawater - allows year-round production of vegetables.
The company has operations in Port Augusta, 300 kilometers north of Adelaide. KKR's capital will be used to finance a 20-hectare greenhouse facility capable of producing more than 15,000 tons of vegetables a year for domestic consumption.
Horticulture is highly water and energy intensive, with these resources representing up to 70% of total farm expenses in some regions. Sundrop's glasshouses differ from the norm in that they do not rely on freshwater and fossil fuels.
Energy captured by solar panels desalinates locally-sourced seawater for use in irrigation. Salt and nutrients extracted during the desalination process can also be used as fertilizer. Furthermore, the combination of sunlight and seawater - the latter sterilizes air in ventilation systems - means Sundrop can control temperatures within the glasshouse. This allows natural pest management and reduces reliance on pesticides. Carbon dioxide, nutrients and other inputs are sourced sustainably.
This system can be deployed in climates that would not otherwise be suitable for agriculture.
"We grow food where land is too arid for farming, fresh water is in short supply and domestic food security is a concern. Farming with typical agricultural inputs would be unsustainable in these regions, so Sundrop uses renewable energy to heat, power and water its crops. Sundrop is the world's first commercially and environmentally sustainable arid climate agriculture business, and this significant investment is at the heart of our growth strategy," Philipp Saumweber, the company's CEO, said in a statement.
Justin Reizes, head of KKR Australia, added that Sundrop provides a "unique and innovative solution to environmental challenges in farming."
Construction in Port Augusta begins this month and is scheduled for completion in 2016. The investment comes from KKR's second pan-regional fund, which closed at $6 billion in July 2013.
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