Getting to Know Cimbria Capital
What is Cimbria Capital, and why choose water and agriculture as a focus?
Cimbria Capital is a private equity investment firm based in Houston and Milwaukee that conducts growth capital and early stage buyout investments focused on the agribusiness and water sectors in North America and Scandinavia — some of the world’s most optimal for large-scale agriculture due to ideal climate and soil conditions. Both are home to many leading water companies and water technology hubs and benefit from political stability, secure property rights, access to capital and world-class research institutions that serve investors.
Critical global competition for scarce water and ag resources is emerging. More extreme weather and climate events foreshadow increased frequency in wildfires, longer periods of drought, flooding, hurricanes and shifting ecosystems. Water and agriculture are highly undercapitalized. An approximate $632 billion investment over the next decade is needed to fix water and sanitation infrastructure in the U.S. alone.
What are opportunities and challenges for investment?
Cimbria anticipates beneficiaries of water and agricultural predicaments will be privately owned, regionally focused service companies, product manufacturers and technology providers. Water and agriculture are transitioning due to next generation technologies and business models, and investors stand to greatly benefit from this momentum. The challenge for general investors is that water and agriculture are fragmented sectors that require domain experience to successfully identify, scale and exit investment opportunities.
As an investor, you have to be “on the ground” and speak the language of the industries. Cimbria is fortunate to be surrounded by specialized private equity investors, consultants, senior advisors, and operating partners who have spent careers in the finance, water and agriculture sectors.
How does investment work?
Cimbria performs its own investment identification through proactive networking, on-the-ground presence and inbound deal flow. Together these activities yield a consistent stream of investment opportunities that Cimbria challenges on a set of fundamental factors it believes imperative for potential investment. Cimbria sources companies scoring high marks in scalable and/or decentralized solutions and management teams anchored in existing industry expertise.
We allocate sizable amounts of capital per investment for control or “negative control” ownership in a company. We apply our unique Acceleration Program to first de-risk the opportunity and then to potentially boost returns above the standard threshold. We are active operators alongside management teams preparing for the next growth stages in the life cycle of these companies.
What do you see in the future?
There will be extensive transition and disruption driven by demand for better foods and clean water and by new technologies and business models. We see great value in ag and water tech companies specializing in Industrial Internet of Things (IIoT) solutions, irrigation innovation and userfriendly, sustainable inputs. Scalability, high demand and easy integration are opportunity to reinvigorate economies, create jobs, preserve natural resources and reward investors.
How can the soybean industry help elevate these issues for investors?
The soybean industry needs to optimize water use throughout the value chain of production. This should be done in anticipation of the continued rise of water prices and in anticipation that all regulation and societal scrutiny related to water use will be stricter over time. The industry needs to be ready to defend financial and societal value of its crop and water required for production.
Brian V. Iversen is founder and managing partner of Cimbria Capital and lead investor and chief executive of the Cimbria team. Noah J. Sabich is a founding member and managing director and oversees the firm’s execution of the Acceleration Program for its portfolio companies, and is responsible for deal flow origination, investor relations and marketing.