November 19, 2017

Blackstone has acquired an undisclosed majority equity stake in Cloverleaf Cold Storage, a leading food logistics and cold storage warehousing company, through a definitive recapitalization agreement.

Founded in 1952, and owned by the Feiges and Kaplan families, Cloverleaf has a network of 19 warehouses across eight states stretching across the U.S. Midwest to the Southeast, providing grain storage, handling, and freezing services to many of the largest food companies in the world. The company also has a Farmers Produce division that provides value-added processing and logistic services. Overall, the company serves more than 800 customers, making it the eighth largest public refrigerated warehouse company in North America.

Under the terms of the recapitalization agreement, the funds secured from Blackstone will be invested alongside existing family shareholders who will remain in place, running the business after the closing.

“At Cloverleaf, we are focused on building our business for the long-term, continuing to deliver our customers best-in-class service and supporting our communities,” said Daniel Kaplan, co-president of Cloverleaf. “Our partnership with a world-class firm such as Blackstone provides us with significant capital and operating resources to invest for growth and continue to expand our platform.”

Cold Hard Facts

The critical position of cold storage in fighting the staggering challenge of food waste is increasingly part of the ag investment narrative.

Global AgInvesting has reported in its Gazette (Volume 4 Issue 2) magazine that the numbers are staggering. The cost to produce, process, transport, and dispose of just the wasted food in the U.S. is $218 billion per year, or 1.3 percent of the country’s gross domestic product (GDP), according to ReFed, a multi-stakeholder nonprofit backed by an influential network of business, nonprofit, foundation, and government leaders committed to reducing U.S. food waste. The volume of food that ends up in U.S. landfills totals 52 million tons per year, generating 3.3 billion metric tons of greenhouse gasses, not counting an additional 10 million tons of food annually that is rejected or left in the field at the farm level. At the retail stage of the supply chain, U.S. supermarkets lose $15 billion per year as a result of fruit and vegetable spoilage and loss alone, reflecting the fact that the bulk of food loss happens upstream of the consumer’s home.

If food waste in the U.S. was reduced by only 15 percent, the food saved would be enough to feed 25 million people per year, when one in seven Americans are considered to be food insecure, let alone the dire food insecurity that is occurring in some developing countries.

Along with the potential to reduce food waste, which in turn could have not only a positive ecological effect, but could also play a leading role in reducing hunger, industry figures point to the potential ROI from cold storage investment.

In the report, Perspectives on Cold Storage Investment Opportunities released by JLL in 2014, the investment management firm states that the refrigerated storage industry is expected to see growth of 3.4 percent per year between 2014 and 2019. As consumers increasingly demand fresher, and highly nutritious foods over canned or fried options, and higher quality frozen meals hold greater appeal to consumers looking for convenience, cold storage gains appeal as an investment.

While it’s true that one can become overwhelmed when trying to absorb the enormous and complex social and economic scenario that these figures demonstrate, there has been a relatively recent shift in the collective view of agricultural waste. Investors, but particularly social impact investors including Blackstone, and agtech innovators, have realized the potential for not only social benefit, but the $2 billion market opportunity that exists in developing solutions to this challenge.

“We are pleased to invest significant capital into Cloverleaf to assist the company’s existing shareholders and management team in continuing to build a market leading platform within the cold storage industry, which has been a strategic industry we have prioritized for investment,” said David Kestnbaum, a managing director at Blackstone.

–Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.