How private equity in the organic sector drives change in the food chain


Last year, Triodos Organic Growth Fund took an equity stake in the sustainable supermarket chain Marqt. The Dutch magazine Ekoland interviewed Fund Manager Jurriën Appers about the fund’s objectives and other companies in the portfolio.

What is the objective of Triodos Organic Growth Fund?

“The fund started five years ago. The goal is long term capital provision to companies that contribute to the growth of sustainable consumer products, food and non-food. Through our participation, these companies can grow and increase their impact. The idea is: we must adhere to a new consumption pattern, because our planet is at the limits of its capacity. The fund criteria are in short: healthy products, which do not deplete natural resources and stocks, and with a fair distribution in the value chain.”

What is the size of the fund and what are the most important investments?

“Four years ago, assets under management amounted to EUR 25 million. At present, that is EUR 55 million. We aim for a size of EUR 150 to 200 million in the long term. The volume growth depends, of course, on the inflow by investors. At present, the fund has equity stakes in six companies: two from Denmark, one from Sweden, two from the Netherlands, and one from the UK. The Dutch companies are the organic wholesale company DO-IT and the sustainable supermarket chain Marqt. Aarstiderne from Denmark is a market leader in organic food boxes. The also Danish Naturfrisk makes high quality organic soft drinks, beers and distilled beverages. The Swedish Naty is the producer of the most sustainable diaper now. And our most recent investment is in Ecoffee Cup, a UK-based consumer goods brand which offers a natural fiber-based to-go cup, as an alternative to single-use cups.”

'Organic growth' is also a nod to the way in which we would like to see the companies in the portfolio to grow.
Jurriën Appers

The fund information states that 65 percent of the fresh products, 68 percent of the fish and 80 percent of the dairy products of Marqt is organic. Apparently, 100 percent organic is not a criterion?

“That's right. The Eko quality mark is a valuable indicator, but we also look at other criteria. Even without the quality mark, products can be good, if they do have no costs to people, environment and animal welfare. Fairness in the chain and the local origin of products are also important. But we constantly think about the criteria and we often discuss them. 'Organic growth' is also a nod to the way in which we would like to see the companies in the portfolio to grow. Not through acquisitions, but through a stable growth in sales.”

Does the fund have a majority or minority interest in Marqt and what authority does that give?

“We aim for a significant minority interest in all participations from 20 to 35 percent, that's also the case with Marqt. I’m in the Supervisory Board myself. The fund is therefore involved with the most important decisions. But more important is that consultations take place regularly between the various parties involved in an enterprise. The dialogue and the personal dynamics are more important than a veto.”

Investment funds are based on return. Which return does Triodos Organic Growth Fund strive for?

“We are aiming for a balanced return of 8 percent. But financial return is not the ultimate goal of the fund, we do not push the companies. You could view it as a healthy return on private equity investments in companies that develop as expected.”

Financial return is not the ultimate goal of the fund, we do not push the companies.
Jurriën Appers

I read that Marqt strives for a maximum net profit of 3 percent on sales. How does that percentage relate to one fund return of 8 percent?

“You cannot compare those percentages properly. In absolute numbers, these are very different values. 8 percent return is a normal percentage of risk-bearing capital. But the precise line that we have agreed upon with Marqt is that above a profit of 3 percent, 25 percent goes to the shareholders and 75 percent to employees and customers. The idea behind this is an honest value chain.”

Last year, ten years after the start, Marqt made a net profit for the first time. What is the future perspective?

“No profit was made last year.”

This is stated in a Dutch news article from May 2017.

“That message was published shortly before we took an interest in the company with the fund. Thereafter, it has been decided to invest further instead of taking profit.”

Stores remain the right place for fresh products and meals. That is also because of the experience value. Marqt tries to respond to this.

Marqt is now very oriented on the big cities in the Netherlands, with ten stores in Amsterdam, two in The Hague, two in Rotterdam and one in Haarlem. Where are the growth opportunities?

“Marqt will gradually grow. There are certainly more places where a store would do well. People from Utrecht, for example, are asking when the chain gets there. But in Amsterdam there is still a market for more branches as well. Of course, we must take other players into account, such as Ekoplaza. Their formula is 100 percent organic. Marqt distinguishes itself with its proposition for a fair value chain. For both formulas, there is a market. The general trend in food retail is an increase in online sales, especially for dry groceries. Stores remain the right place for fresh products and meals. That is also because of the experience value. Marqt tries to respond to this.”

How do companies come into the picture for Triodos Organic Growth Fund?

“This is partly done via the Triodos network. The Danish company Aarstiderne, for example, we already knew. We are looking for sustainable companies that are at the forefront in their sector and really like change: change in the food system, the value chain or the environmental footprint. We like to get into the conversation with interesting companies. In addition to the connection with our impact objectives, a lower limit of EUR 5 million turnover is one of our financial criteria.”

This is a translated and updated version of an interview in the Dutch magazine Ekoland.

Find out more about our investments in sustainable food and agriculture here.

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