South American Real Estate News

Some horticultural investment options by GCA Ltda in Peru.

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Here we have listed various permanent crop options currently available in Peru’s horticulture heartland suitable for foreign investment.  The opportunities we have seen as GCA Ltda in the last months in Peru are summarized in the following table.  These investment opportunities are mostly in the counter-season export-orientated fruit sector, all with strong product demand and growth potential.  

Codes

Region

Main Business

Related Ha (*)

Opportunity

PERNAVO001

North

Avocados

500

Partnership, Greenfield

PERNAVO002

North

Avocados

200

Partnership, Brownfield

PERNAST003

North

Avo-Asp-TableG

400-650

Asset acquisition; Buy-out

PERNDAT004

North

Blueberries-Avos

100-300

JV; New Project Partnership

PERSVAP005

South

Blueberries-Avos

100-500

Asset acquisition; JV

PERNDAN006

North

Avocados

100

JV; New Project Partnership

PERSAVO007

South

Avocados

100

Partnership, Greenfield

PERNANC008

North

Row Crops

500+

Buy&Lease

PERSBLU009

South

Blueberries

30

Fruit Exp/MezzDebt/JV/Sale

PERNTGA010

North

T. Grapes – Avo

200-800

Asset acquisition; Partnership

PERNTES011

North

T. Grapes

100-700

Asset acquisition

PERSTGA012

South

T. Grapes

250-550

Asset acquisition.

Code : PERNTES011

Farm for sale. 700+ hectares (ha) of horticultural land in the north of Peru. The vendor is an experienced grower-exporter of different fruits and vegetables. Operating in different regions along Peru, they grow and market asparagus, table grapes, avocados, and pomegranates, among other fresh products.   As the Peruvian fresh asparagus business has been shrinking in the last years against Mexico, the Company, like many others along Peru, is exiting this business, focusing on more profitable crops. The farm for sale is a former asparagus unit with a successful smaller avocado unit.  Given the large Capex needed to replace the old asparagus with another permanent crop, the decision is to exit this asset and focus on other already-producing farms closer to their main production area and headquarters. The horticultural farm for sale has the following characteristics:

  • Climate is suitable for early mangos, asparagus, and avocados (hence also suitable for blueberries).
  • 700+ ha sandy horticultural land.  100+ ha  irrigated land with drip irrigation and high-tech fertilization equipment. 700 m2 in construction. Main Office and irrigation equipment sheds.
  • The farm has at least 500+ ha additional (out of 700 ha) suitable land for permanent crop development.
  • Deep wells totalizing 150+ litres per second.  Low-depth wells (lower pumping costs), between 40 and 50 metres.  
  • The farm area is open to more water rights requests, as investors present deep wells findings and proper agricultural use (project) and justification. 
  • The vendor, which is currently requesting extra water rights from the government,  offers an Earn-out scheme per registered litter he manages to incorporate into the farm up to 12 months after the closing. 
  • The seller is a well respect agribusiness company that could support the buyer to develop the land and later export future production. 

Code: PERSTGA012

The farm for sale is a flat irrigated 250+ hectares (ha) plot of prime horticultural land in the south of Peru, with 130+ planted hectares of certified table grape, fully implemented and with infrastructure to pack, cool and export directly all its fruit within 48 hours to the most demanding markets worldwide. The land is in a region with well proven and mild climate to produce high-quality table grapes. Registered water rights for current plantations of up to 200 lts/sec have been secured, with various deep wells. Infrastructure (7.000 m2) includes offices, a packing house (110 tonnes/day), cool stores, and drip irrigation systems. Access to a paved road connects with the regional main city to the east and two ports to the pacific ocean to the west. The farm is neighbouring another sister plot of 300 hectares also available, part of the same group totalling more than 550 potential ha. Other highlights:

  • Foreign fruit buyers are well-known and respected US and EU companies.
  • A desirable mix of traditional conventional and organic varieties, as well as Licensed fruit of the Sweet IFG line. As of March 2022, AM FRESH announced to Acquire IFG and Merge it with SNFL. The farm has both IFG (Sweet Globe) and SNFL (A. Royal) varieties.
  • Fruit is havested between October and February, which is complementary to Peru’s early season (North – Piura) and coincident with Chile’s mid-season, in all a very good complement and geographic portfolio diversification for larger table grape groups.

Code: PERNAVO001 The opportunity is to join a 500 hectares (ha) avocado greenfield project in the North of Peru. A relatively new investment company acquired land holdings for more than 3600 hectares. Formed by agricultural professionals that worked related to the industry in the past. Only in avocados they developed more than 2000 hectares of successful full Hass orchards in the same region. After years of working and travelling within Peru, they acquired this particular lot of land, which has access by a paved road to the regional capital city and port. Investments in land add already for USD 10 million +, and projected CAPEX developments for years 1,2 and 3 were projected at USD 15 million, 8 million and 1 million, respectively, including deep wells and more than 200.000 m3 in water reservoirs.

Reverse osmosis equipment is also projected to secure future water quality for the project; Accumulative OPEX for years 1 to 5 is 10mln. The founder projection is to reach sales in year 5 up to USD 16 million with 25 tons/ha in production and EBITDA of USD 8 to 10 million.

The opportunity is to join this group of experienced avocado developers by way of a non-controlling partnership, most probably between 34 and 49% participation, in the new agricultural company (New Co). 

The greenfield project, currently bare land, estimates that only 20% of capital will be financed with debt once the investment is in place. The advisor (GCA Ltda) also has extensive debt experience in Chile and Peru, particularly with avocados.  The project was planned to start in 2020, but due to Covid restrictions and market changes, it was put on hold until today.

Code: PERSAVO007. The company is a Peruvian grower-exporter with more than 10 years of direct experience exporting and managing conventional and organic Hass avocados in different Peruvian regions to the most demanding markets worldwide. The business started without its own land and grew through long-term relationships with small (5-20) and mid-size (20 – 50 has) growers to develop high-tech farms all along Peru. These growers work under the most demanding quality assurance programs, counting over 800 hectares (ha) of avocados grown and exported to more than 20 countries. Buyers of the company are mostly US and EU supermarkets, food services and other types of importers who work under pre-order programs and long-term relationships. As associated growers are strategically placed all along Peru, the company can export high-quality fruit almost all year long, with a higher volume in the Peruvian early window between January and Abril, when prices and returns to growers are higher than in the main season (May to September).

The investment opportunity is to join this experienced avocado grower and exporter to partner with a new farming unit from a set of selected lands ready to be bought. The investment would be a pure greenfield. Other ways of partnership for growth are also open for discussion. 

The founder will benefit from this association by having access to financial resources to grow faster than his current capabilities and take a strategic opportunity in the current Peruvian avocado market development.

The buyer will benefit by entering the Peruvian avocado production/export business with an experienced (avocado) operator, which could diversify and expand into other crops.

Code: PERNTGA010 Farm for sale or partnership.  The owner is a subsidiary of a larger food holding. With activities in Chile, Perú and other countries, they have hundres of farmland hectares in prime regions. In Perú, they manage 800+ hectares with 200 planted hectares, mostly with table grapes, avocados and citrus. Table Grape production standard is at 3.000 cases/ha (25 tonne/ha), which are exported to more than 10 countries. Table Grape production is mainly of green varieties (3/4) complemented with red table grapes (1/3);  36% of varieties are licensed, which opens the opportunity for future regrafting to either renew varieties and/or balance the green/red composition of their product portfolio per buyer’s needs. Fruit is harvested between October and January. Farms have all the necessary quality assurance certifications to export to the most demanding markets, like GlogalGap, amongst others, plus adequate management systems and accounting under IFRS and SAP software. Facilities include a packing house (15k/cases/day), Cool storage, deep wells, reservoirs, and independent generators, amongst all other necessary equipment to operate adequately a 200 ha-planted hi-tech fruit farm. 

More information required? Link here. 

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About Gustavo Cardemil

Gustavo is the Managing Director & Founding Partner of Asesorias del Agro GCA Ltda, a niche consultancy firm specialized in Financial advisory, rural real estate, and services for the agricultural sector since 2015. Gustavo is a multidisciplinary professional, with more than 20 years of experience in agriculture and finance, with a vast knowledge in management, strategy, banking and rural financial risk assessment in Chile and Peru.

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