PE firm Proterra bets on alternative protein boom in Asia

Photo: Ina Burkardt/ Pixabay

It’s a homecoming for the humble mung bean.

The tiny green legume, grown across Asia, is the key ingredient in Just Egg, a vegan alternative to eggs that San Francisco-based Eat Just produces and sells across the US. Now, the company is banking on demand for Just Egg to take off in Asia as well, particularly in China, where more eggs are consumed per capita than anywhere else in the world.

In late October, Eat Just teamed up with private equity firm Proterra Investment Partners to develop a plant protein production facility in Singapore that will supply Just Egg in Asia.

Under the terms of the deal, a consortium led by Proterra will invest up to $100 million, while Eat Just will invest up to $20 million to build and operate its first Asia facility, which is also its largest. Proterra’s investment is expected to come from the latest food-focused fund it is raising. Further plans include the commercial production of cultured meat.

The PE firm is coming in as a strategic partner, involved in the whole value chain — from procurement and production to packaging and distribution. “We’re building a business in Asia,” said Tai Lin, managing director of Proterra Asia.

The new entity, Eat Just Asia, will be headed by the firm’s director of investments, Saurabh Bajaj, who will be its CEO. “It’s not a typical private equity investment where an investor comes in, writes a cheque and goes back assuming they have to come in only once every three months,” said Saurabh.

“We’re a private equity fund, but one of the things we’ve done is to build companies from scratch,” Lin added.

Conscious consumer

To be sure, Eat Just is just one of a number of alternative protein producers that have sprouted over the last few years. 

A September report by The Good Food Institute, a Washington DC-based non-profit that promotes plant-based protein, showed that some $1.5 billion was invested in alternative proteins this year. Investors span the gamut from food businesses Louis Dreyfus Co, Kraft Heinz, Danone, and Mars to Bill Gates-backed Breakthrough Energy Ventures, Thiel Capital, and Singapore’s Temasek Holdings.

Plant-based burger maker Impossible Foods, for one, has raised some $1.5 billion in funding since its founding in 2011; the latest funding round in August brought in $200 million. Investors in Impossible include Temasek, and Horizons Ventures.

Nevertheless, the way that Lin sees it, the alternative protein sector, with Asia in its sights, is primed for investment. 

Demand is growing in markets such as China, which has a young, urbane, and increasingly affluent population that is on the lookout for premium products that fulfil criteria that include environmental sustainability and animal welfare. At the same time, food production and food security have moved to the top of a number of national agendas, including in Singapore and China.

“Consumer demand is shifting. Therefore the supply chain we invest into needs to transform as well,” said Lin. “Everyone cares more about clean food, safe food — exactly the type of investments we make.”

Eat Just claims the quantity of Just Egg it has sold is equivalent to 60 million chicken eggs. The vegan product, which reportedly scrambles just like chicken eggs, is made in a Minnesota facility and sold in supermarkets and restaurants across the US. There is another factory in Germany run in partnership with potato starch manufacturer Emsland Group. Just Egg is also distributed in South Korea, Thailand, and mainland China.

The challenge may be to convert mainstream consumers to the vegan alternative.

“We’re not trying to replace normal eggs,” Lin said. “All we need is what milk substitutes have done. Just go from below 1 per cent market share to close to 10 per cent market share in 10-15 years.”

DealStreetAsia understands Proterra is also on the lookout for more investments in the food industry in Southeast Asia, such as premium dairy products that are produced locally, for local consumption — a practice that would likely have a lower carbon footprint.

Proterra was carved out of agribusiness giant Cargill unit Black River Asset Management in 2016. The PE firm has some $2.5 billion in assets under management across the global agriculture, food, and metals and mining sectors. Investments in food account for the largest share of the total portfolio. 

Lin declined to provide details on the latest fund the firm is raising, but said Proterra’s objective is to maximise the fund portfolio. “There is no minimum size anymore,” he said. “There is the traditional thought where there are typical deal sizes, and people reject deals because they’re too small, or too big.”

“The PE fund is structured to pay LPs back on the return on the fund. So if there’s a small deal that enhances the overall portfolio either strategically or financially, we should do it.” 

DealStreetAsia had previously reported that Proterra is in the market to raise as much as $700 million for its Food Fund III. The PE firm had previously launched two funds for Asia. Its second food fund closed at $700 million, after a $460 million first fund. Investment ticket sizes ranged between $30 million and $50 million, with a focus on India, China, Indonesia, and select markets in Southeast Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.