CIO Update, May 2019
This is the first of a series of more frequent updates to the GSCM team to share our progress as a company. This first update will be somewhat longer to bring everyone up to speed. We plan to issue a monthly update going forwards covering the following sections: Portfolio, Investors and Distribution, Research, Personnel, Regulatory.
Over the last two months the team has been focused on updating the portfolio of projects and developing an early distribution strategy. The initial offering for investors is a multi-country ‘blueberry bond’, based on investments in Zambia, South Africa and Morocco. To support that investment, we’ve been working on a summary of the blueberry market globally. The current model is in the transactions folder and $32m of debt paying a 7.5% coupon alongside $9.1m equity, and may change as we receive investor inputs.
In parallel we have been updating the other leading projects that are in an late stage of review including Ugandan Vanilla, Guyana Coconuts and Tanzanian Pineapples. The latter project was under due diligence with another investor but their deal fell through and they have approached us again. We were approached by a fund in Mexico that has developed sustainable banana, timber, palm oil and berry opportunities and we completed an initial site visit in May. There may be an opportunity in the future to invest alongside a Mexican pension fund.
In addition, we have looked at a number of agricultural technology projects including a vertical farming opportunity in Europe. At this stage we are focused on emerging market opportunities, but we see value in looking at sector over time.
The core team has identified around 55 initial investors to test the blueberry bond project with. We are looking for friendly and constructive feedback before going to the wider market. We also have established a brokerage relationship with Quince Capital and they have been working with a number of family offices. Most recently, we participated in an investor event in New York, organized by 361.
Part of GSCM’s strength is that we take a research intensive approach to investment. Our team has completed a number of paper in recent months. The most prominent is a paper for distribution to investors that describes the SIS methodology and its alignment with the Sustainable Development Goals (SDGs). The paper will be distributed shortly to the team and to our networks. The SIS was also converted to an online version to simplify the data collection process.
We have also completed papers on Global Blueberry Markets, Superfoods, Agricultural Technology and have expanded the Portfolio Assessment Tool to measure country, operator and commodity risk. We summarized the country risk profiles from a number of sources for the countries we are targeting for investment. We also have work underway to understand the best approach to enforcing smallholder contracts in Uganda.
We have been lucky to be able to recruit a number of high quality individuals who have energized the analyst team. Madeleine Helms has been working with the company for a number of months and has been playing a key role in research and administration. Arindam Basu, has been working on deals - ex Lehman and recently completed a billion dollar fund raise for an Indian solar company and a New York listing on NYSE. Yang Zhou and Patricio Cummings are recent MBA graduates from Vancouver. Yang has been working on financial modelling and Patricio has been working on legal and investment analysis from Mexico. GSCM has been in negotiation with an African team that has worked closely with Deutsche Bank in the region and we expect to have an agreement in place within a week. This will give us real in-country fund management capacity, which will be important for investors.
GSCM has received FCA regulatory approval to manage a fund, an upgrade from our existing permission to market deals. Our current nominated vehicle, is GSCM Capital I, a wholly owned subsidiary.