INOKS sustainable food strategy backed by €40 million from EIF
INOKS Capital will run a fund for sustainable food that has now earned European Investment Fund (EIF) backing of €40 million.
INOKS Capital has been working on a fund for aiding the transition to a fairer, healthier and more sustainable food system in Europe. Now, at the pre-inception phase of the fund, the EIF has backed them with a €40 million commitment. As the fund’s target is €150 million, the EIF’s contribution is significant; equally so is the public-private collaboration at work, an approach designed to meet the needs of agricultural small and medium-sized enterprises (SMEs), particularly in Europe’s east.
Origins in the gaps
The EIF’s funding is provided under the InvestEU program – which, as covered earlier this year, brings €372 billion to the goal of financing Europe’s future.
A large part of this future is a fair and environmentally sustainable agricultural and food system. Plans to reach this goal are lined out in the EU Green Deal, more specifically in the Farm to Fork strategy. As part of their strategy, INOKS Capital looked to these initiatives for alignment of their impact KPIs and noted the lack of access to finance for European agri-food SMEs.
The financing gaps facing these SMEs can appear staggering. Late last year at a conference concerning on the topic, Janusz Wojciechowski, European Commissioner for Agriculture and Rural Development, presented findings that, “the unmet demand of farmers for financing by banks has reached €62 billion in 2022.” Especially relevant to the EU Green Deal, “€18.9 billion’s worth of investments linked to the green transition of the sector had not been met in 2022,” (the year of the surveys Commissioner Wojciechowski and the coverage of the gaps refer to).
Closing these gaps will require capital and action beyond the public. According to Gelsomina Vigliotti, Vice-President of the EIB, “The sheer scale of investment needed in the sector requires that we use the scarce public funding available wisely. We need to leverage more private sector investment, and this is where financial instruments have a role to play.”
Financial instruments – such as those INOKS Capital has already put to use in the past for investments in sustainable agriculture.
Future in transition
INOKS Capital has built a track record supporting sustainable agriculture and food, having deployed $7.5 billion in the sector globally. Moreover, experience has taught the INOKS team that agricultural SMEs need not only customisable financing, such as pre-financing a farmer’s crops, but often advice as well. They’re poised to provide this advice from a deep well of expertise.
INOKS Capital’s experience in supporting ag-tech companies is an asset too, as innovation is key to ensuring green agriculture stays competitive and inclusive. Support for companies in research, innovation and new technologies will be a part of the fund’s investments, directly aligned with the agri-food sector’s green transition. As summarised in this EIF article on the backing: “The fund serves the major EU objectives of the transition to a low-carbon economy.”
In the same article, the EIF offered some elaboration on the reasons for their support:
“A significant portion of the portfolio companies will support climate action and environmental sustainability goals, in line with the EIF’s criteria. The fund’s approach to its performance fee and financing rate structure aims to ensure that both the investment manager and portfolio companies are incentivised to achieve ambitious impact key performance indicators (KPIs) aligned with the EU Green Deal objectives.”
INOKS Capital CEO and co-Chief Investment Officer Nabil Marc Abdul-Massih shed light on what the EIF’s backing means for him and his team. “We believe that sustainable food and agriculture are critical to the future of our planet, and we are proud to have the support of the EIF in this vision. This partnership will help us to strengthen the EU food system’s resilience, reduce its environmental and climate footprint and provide customised access to capital for smaller corporates that are today’s innovators.”
“Today’ innovators” Nabil mentions will become tomorrow’s contributors to a greener, more inclusive food system for Europe. At this stage, however, the fund must fundraise to ensure that happens. They continue to work towards a €150 million first close for private investors.
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