Brazilian Pátria Seeks To Buy Chile's Largest Distributor Of Bio-inputs And Accelerates Consolidation Of The Sector In Latin America

The São Paulo-based fund manager is negotiating the acquisition of NS Agro, thus extending the most relevant series of purchases of agricultural input companies in South America and increasing its presence in the biological sector.  

F. Aldunate M. 

Brazil's Pátria financial group is taking the lead in the consolidation of Latin America's agricultural input sector. This, after reports that the firm is negotiating the purchase of NS Agro, one of the main marketers of phytosanitary and plant nutrition products in Chile and Peru, and which has an important presence in the distribution of biological products. 

The negotiations became known after an essential fact and through a statement from the Competition authority

The operation is still in a talking stage , but, if it takes place, the Brazilian group will make one of their largest investments in a sector where they have been very proactive, with about a dozen company acquisitions in recent years. NS Agro, a subsidiary of the Norte Sur investment group, is a holding company that brings together three firms and that added sales of US$190 million in 2021. Most of them come from Martínez y Valdivieso S.A (M&V) and Cytoperú, two input suppliers that cover the Chilean and Peruvian markets, and that have increased their catalog of biological solutions for plant protection and nutrition. Additionally, there is AgroAdvance, a biogenetic firm based in Santiago that is developing bio-inputs for the agricultural sector.  

M&V is the largest player in the Chilean phytosanitary and plant nutrition product distribution segment, with about 26% of the market, according to sources close to the company. Biological solutions have been growing in the company’s catalog for about 15 years, when it began a distribution agreement with the firm Nativa, and gradually began incorporating products from new brands such as UPL, Corteva, and Bayer. 

13 adquisitions in two years

NS Agro podría sumarse al ramillete de adquisiciones que el grupo brasileño ha realizado en Brasil y en Colombia, y que le ha permitido conformar un catálogo y cobertura sin igual en esos mercados clave de Sudamérica. “Como buen operador de fondos de private equity funds, their objective is to buy in order to consolidate, look for efficiencies, improve results and sell in the future”, says an investment banker who prefers not to be named. “In the agricultural input sector, that is what they did with Agrichem, the Brazilian agrochemical company that they sold in 2018 to the Canadian Nutrien for about US$85 million.”

Investment firm Pátria Investimentos has already made a major exit in agricultural inputs assets by selling the firm Agrichem to Canadian Nutrien for US$ 85 million in 2018. 

In this case, the effort to consolidate assets in the sector is greater. In 2017, Pátria Investimentos created Terra Verde Group, with the aim of integrating several companies that it had acquired in the sector, and whose name changed to Lavoro Agro in 2020, which has become the largest distributor of agricultural inputs originated in Latin America. 

The Lavoro firm, which estimates market sales of close to US$1,400 million in 2021 and more than 2,000 employees, explains in its website that its strategy is based on four pillars: widespread presence in the most relevant markets in Latin America, a strong financial position and risk management capabilities, building mutual trust with customers and suppliers, as well as driving innovation in distribution, including technology and digital platforms. 

Its acquisition strategy changed the structure of competition in Brazil. In the Mato Grosso, Tocantins and Rondônia states, it controls the operations of Impacto (purchased in 2019), Agrovenci (2020), América (2020) and Central Agrícola (2020). In Paraná, Grupo Pitangueiras (2018) and Grupo Desempar (2020). In Goiás, it owns Produtec, Integra (2020) and Agrozap (2021). In São Paulo, Qualicitrus (2020). In Mato Grosso do Sul, it recently bought Cultivar (2020). In Minas Gerais, it has Produttiva Agronegocios (2021). Last February it bought Nova Geração, one of the largest distributors in the Metropolitan Region of São Paulo and in the South of Minas Gerais.

Outside of Brazil, Grupo Lavoro is present in Colombia, with Grupo Gral (2017), AgSe (2018), and Cenagro (2021). 

In its sustainability report, the firm indicates that Lavoro bought a total of 13 companies between 2020 and 2021, two of which are dedicated to the production of biological solutions. These are Agrobiológica Soluções Naturals and Maneogene, which were consolidated into a single company called Agrobiológica Sustentabilidade. 

Read the article “Brazilian bioinputs company invests US$ 22 million to set up plant in the state of São Paulo“

With this long list of acquisitions, Pátria, through Lavoro, formed a network of 17 input brands in the Brazilian market and seven in the international market, covering the entire production cycle: from the supply of fertilizers and inputs for soil nutrition, seeds for a wide variety of crops, chemical and biological pesticides for crop protection against diseases and pests, and complete solutions for plant and soil health.

Marcelo Abud, CEO of Lavoro, the firm that concentrates a large part of Pátria Investimentos' agricultural assets, had indicated last November that its growth focus was in Chile and Peru, in addition to Uruguay and Ecuador.  

The company had already announced its interest in entering the Chilean market. Last November, the CEO of Lavoro, Marcelo Abud, informed that he made a trip to Chile looking for expansion opportunities. On this occasion, the executive announced that he wanted to enter new markets. "Lavoro is focused on continuing to expand its activities in Brazil and in South American countries, such as Colombia, Chile, Paraguay, Peru and Uruguay," he told Reuters in late October 2021.

Pátria Investimentos is a major operator of alternative asset funds in Brazil, with a strong presence in sectors such as Water and Waste, Banking, and Infrastructure. In Chile they had already made headlines in 2021 after acquiring Moneda Asset Management, one of the largest investment fund operators in the country with a strong presence in Latin America.