KANSAS CITY, MO. — The competitive landscape steadily evolved for the pet food and treat industry in 2020. Consumer demand influenced product offerings and channel distribution and, of course, the pandemic affected just about every aspect of business. But one factor impacting the competitive landscape was a familiar culprit. Private equity interest in this industry was steadfast and may grow even stronger in 2021, as sales of pet food and treats held strong during the pandemic with a vast majority of companies reporting growth.
Private equity ownership and investment often seems like a slow game of cards. As the deck is shuffled among the various players, the competitive landscape changes. For each individual supplier, processor and brand, those changes can be for the better, and sometimes they can be for the worse. These investments in the industry affect all companies, including those with private equity ownership and those without.
For those companies under private equity ownership, the pressure is on to grow quickly. With money seemingly no object, the conservative approach to capital expenditures and modest debt that undoubtedly helped attract private equity interest may need to be replaced with a “go big or go home” attitude. The one constant in this big-stakes card game, however, is the cards will continue to change hands, offering some companies as little as 24 or 36 months before the deck is shuffled again.
Just based on the private equity news Pet Food Processing covered in 2020 and so far in 2021, firms dispensed at least $494 million in funding to established brands, newcomers, and suppliers in the industry. This is based off occurrences in which private equity firms or pet industry brands shared investments publicly. Pet Food Processing also counted nine flat-out acquisitions by private equity firms over the same period.
Looking back at private equity’s impact in 2020 on the pet food and treat industry, Pet Food Processing compiled the following list of private equity news.
Private equity acquisitions
Most recently, Dane Creek Capital Corp. acquired Growlies Pet Foods, Inc. through its subsidiary United Raw Pet Foods, Inc. This marked the first acquisition of a pet specialty retailer made by United Raw and Dane Creek, adding to its growing portfolio of Canadian, raw pet food-focused businesses.
In early January 2021, May River Capital added to its portfolio of equipment suppliers by acquiring Unibloc Pump, a supplier of positive displacement pumps, strainers, valves and other equipment to the pet food processing industry. The price of this transaction was not disclosed by either company. May River Capital is also the owner of Advanced Materials Processing and its two subsidiaries, Kason Corporation and Marion Processing Solutions.
In late December 2020, Northern Star Acquisition Corp. announced its merger with Barkbox, Inc., an omnichannel pet platform offering subscription-based monthly toy and treat boxes for dogs. This deal took Barkbox public on the New York Stock Exchange under the ticker symbol “BARK.” Northern Star estimated the pet company’s enterprise value at $1.6 billion.
Ownership of Mid America Pet Food, LLC passed from one private equity firm to another in mid-December, with TA Associates purchasing the Texas-based pet food manufacturer from Trinity Hunt Partners in collaboration with investments from Rx3 Growth Partners, a growth equity fund founded by the Green Bay Packers Quarterback Aaron Rodgers.
Back it up to late November, when Clearlake Capital Group, L.P. acquired WellPet LLC, a company owning several successful pet food and treat brands, from previous private equity owner Berwind Corporation.
Earlier that month, investment funds managed by Morgan Stanley Capital Partners sold Manna Pro Products to Carlyle Group, another private equity firm. Carlyle Group’s Carlyle Partners VII, which holds $18.5 billion in capital, fund invested in Manna Pro to acquire a majority stake in the company.
In mid-October, AUA Private Equity Partners, LLC acquired Westminster Pet Products, a pet treat, chew and product manufacturer based in Rhode Island. This marked AUA Private Equity’s first pet industry acquisition.
Alvarez & Marsal (A&M) Capital Partners acquired a majority stake in BrightPet Nutrition Group in early October from its previous private equity owner, Graham Partners. Graham Partners created BrightPet Nutrition Group in April 2016 by consolidating three pet food companies: Ohio Pet Foods, Inc., Blackwood Pet Food, LLC, and Southern Tier Pet Nutrition, LLC.
Prairie Dog Pet Products was fully acquired by Kinderhook Industries, LLC in June 2020. In October, the company announced three leadership changes, including a new chief executive officer, chief revenue officer and chief financial officer to steer the company through its next phase of growth.
Investments shaping the industry
Most recently, Open Farm secured more than $65 million in investments led by global growth equity firm General Atlantic. This was the firm’s first pet industry investment. As a result, General Atlantic joins Encore Consumer Capital as a minority partner of the pet food company.
Across the Atlantic Ocean, London-based Edgard & Cooper received $22 million from The Craftory, an international investment firm with offices in London and San Francisco. These investments were a result of the pet food company’s series B funding round, in which DLF Venture also participated.
Phillips Pet Food & Supplies announced it had received $20 million in capital investments from existing investors in November 2020, as part of the pet industry distributor’s “comprehensive refinancing” efforts. The distributor also received an expanded revolving credit facility led by Wells Fargo Bank to increase its liquidity.
In the land down-under, Lyka Pet Food secured $1.57 million in funding in August to help increase production and accelerate product development.
Smalls, a direct-to-consumer cat food company, received $9 million in a funding round led by Left Lane Capital. The company raised $12 million in total series A funding, including investments from Founder Collective and Companion Fund, which had both made previous investments in Smalls.
L Catterton, a global private equity firm based in New York, made a strategic investment in Brazilian e-commerce pet platform, Petlove, in June 2020. The amount of the investment was not disclosed by either company.
In January 2020, AnimalBiome secured $1.5 million during a seed funding round, bringing its total seed funding amount to $2.25 million.
That same month, MiAlgae, a Scottish biotech startup producing microalgae ingredients for global pet food applications, received roughly $1.31 million in investments led by four groups: Equity Gap, Scottish Investment Bank, Old College Capital, and Hillhouse Group.
Funding insect protein production
In light of sustainability concerns and those related to the global food supply — namely the global supply of sustainable protein— insect processing is gaining speed as an environmentally friendly and nutritionally effective alternative. Read about a few insect processors who secured private equity investments to continue developing and producing insect-based ingredients for the pet food and treat industry below.
In October 2020, French ag-tech startup Ÿnsect closed its series C funding round with $372 million in investments led by private equity firms around the world. These include Brussels-based Astanor Ventures, Los Angeles-based Upfront Ventures, US-based FootPrint Coalition, Hong Kong-based Happiness Capital, Paris-based Supernova Invest, and Armat Group in Luxembourg. The majority ($224 million) of Ÿnsect’s total series C funding was provided in 2020, while the other $148 million was raised back in 2019.
Protenga, another insect processor based in Singapore, received $1.6 million in funding from Roslin Technologies and Seeds Capital, the investment arm of Enterprise Singapore. Protenga primarily produces protein from black soldier fly larvae in Malaysia. These proteins are used in a number of flagship finished goods made by the company, including a line of insect-based pet food, YumGrubs.
In March 2020, Protix found a new investor in Rabo Corporate Investments, also known as Rabobank. The investment amount was not disclosed by either company, but will help the Netherlands-based company scale up for international expansion.
Keep up with the latest private equity investments in the pet food and treat industry on our Mergers and Acquisitions page.