Earlier this year, Berkshire Hathaway and 3G Capital created the Kraft Heinz Company by merging H.J. Heinz Company with Kraft Foods Group. The deal, valued at $40bn, represents the largest ever private equity-backed investment in the food & agriculture industry. Historical data shows that private equity fund managers are not unfamiliar with large investments in the sector, as the $31.1bn take-private of RJR Nabisco by KKR in 1988 suggests. Preqin’s Buyout Deals Analyst online service has recorded 1,815 private equity-backed transactions in the food & agriculture industry since 2006, worth a total of $205bn.
As seen in the above chart, there was a decline in both the number and aggregate value of private equity-backed investments in the industry in the wake of the Global Financial Crisis. Equally, the aggregate value of transactions in the industry has fluctuated between years. Last year witnessed a record 217 transactions in the sector, exceeding the previous high of 208 deals achieved in 2007. So far in 2015, 153 investments worth a record $46bn have been made in food & agriculture companies, with two months of the year remaining. This already represents a dramatic 278% increase from 2014 as far as aggregate deal value is concerned. Nonetheless, the $40bn merger of The Kraft Heinz accounts for 87% of this total.
Within the food & agriculture industry, the food sector continues to attract the most attention from private equity fund managers. Investments in food companies account for 110 of the 153 transactions made so far in 2015, representing a 72% market share. Furthermore, investments in food companies currently account for 91% of the aggregate deal value in the industry, totalling $42bn. Investments in beverages companies have made up 23 of all deals in the industry so far in 2015, with a $4bn contribution towards the aggregate deal value.
Europe (37%) and North America (39%) hosted a combined 76% of the total number of deals in the food & agriculture industry in 2015 YTD, a combined six percentage point increase from 2014. Furthermore, North America accounted for the vast majority of aggregate deal value, primarily due to the Kraft-Heinz merger.