Equilibrium Capital Expands Greenhouse Portfolio With Southern California Project

Global AgInvesting

By: Lynda Kiernan

Equilibrium Capital Group, an asset manager focused on sustainable and impact-driven real asset agricultural investments, announced it has partnered with Revol Greens to develop a 16-acre, advanced technology-automated lettuce and leafy greens greenhouse in Tehachapi, California.

Equilibrium invested $11.3 million in Minnesota-based greenhouse operations of Revol Greens in December 2018.

Growing a range of leafy greens in protected greenhouse environments, including baby arugula, baby spinach, red and green leaf lettuces, romaine, and butter leaf lettuce on a year-round basis, Revol Greens operates a 10-acre greenhouse at its base in Minnesota, and has seen demand in the U.S. Midwest outpace its production.

“The heightened awareness around food safety has only increased the appetite for greenhouse grown produce,” said Jay Johnson, president of Revol Greens at the time. “We look forward to expanding our greenhouse operations so that we can serve the growing number of consumers seeking out fresh, great-tasting lettuce that is safe to eat.”

This project in Tehachapi will serve to anchor Equilibrium’s state-of-the-art, 64-acre greenhouse that it recently acquired from California-based hydroponic vegetable grower SunSelect Produce. It is the next major investment in Revol Greens’ “5 Years – 5 Facilities” strategic plan to become the leading producer of high-quality, regionally sourced, sustainable and safe leafy greens in the U.S.

“We are proud to support Revol Greens in their 5 Years – 5 Facilities plan,” said David Chen, chairman, Equilibrium. “We believe, in 2020, with their 26 acres of total greenhouse growing space, equivalent to over 1,000 acres of open field production, Revol Greens is poised to be the leader in advanced technology greenhouse lettuce and leafy greens grown in the U.S. Equilibrium and our partners are well positioned to meet the growing retail, food service and consumer demand for fresh, safe, and local foods.”

Opportunity Amid Challenge

Contrary to most greenhouse lettuce producers who are focusing their expansion plans on the U.S. East Coast, Revol has gone in another direction, turning its attention to Southern California, the leading production region in the country for lettuce and leafy greens.

Traditional outdoor growers in California and Arizona have been facing a host of challenges from water scarcity and drought, to food borne illness outbreaks, outlined in an update issued December 19, 2019, by the Centers for Disease Control and Prevention (CDC), that states 138 people across 25 states have been infected with E. coli 0157:H7 from romaine lettuce grown in California.

These issues being dealt with by traditional producers have created a scenario giving a competitive advantage to Revol Green’s technologically-driven growing operations.

“Given the scarcity of water resources in California, where agriculture accounts for 80 percent of total water use, we wanted to bring a sustainable solution to the region and challenge the way we think about traditional growing,” said Brendon Krieg, partner, Revol Greens.

Each of Revol Greens’ locations, including its newest at Tehachapi, leverage the company’s proprietary sustainable growing platform and processes, which use 90 percent less water and are more efficient compared to traditional production methods. Each greenhouse is highly automated, incorporating machine harvesting, and hands-free packing for clean, traceable, and safe packaged lettuce and leafy greens.

“Revol Greens has developed the technology to grow fresh, 365 days a year in-region produce, from the harsh winter and humid summer climates of Minnesota to the dry, hot desert climates of Southern California,” said Krieg.

A Well-Positioned Category

As an investor, Equilibrium views greenhouse production as a category that is not only well-positioned to answer shifts in consumer taste and demands, but one that is also ripe for private equity.

“We see a tremendous opportunity for the future of controlled environment foods,” said Chen, who delivered a presentation on Institutional Scale Controlled Environment Agriculture at Global AgInvesting 2019 in New York last April.

There’s been huge developments for Equilibrium Capital over the past 12 months. In February 2019, it was announced that Australia’s LGIAsuper committed $112 million to Equilibrium Capital’s newest fund – a vehicle focused on investment opportunities in fresh food production in North America.

That same month, Equilibrium Capital Group announced a partnership via equity investment in Houweling’s Group, an advanced greenhouse grower of tomatoes, bell peppers, and cucumbers. Together, Equilibrium and Houweling’s are modernizing and expanding Houweling’s advanced technology greenhouse facilities located in California and Utah.

Only three months later, in May of last year, Equilibrium Capital invested $82 million in AppHarvest for the construction of a high-tech, climate-controlled greenhouse project in Morehead, Kentucky.

Equilibrium is also one of the largest investors in hydroponic berry production in North America; holding significant operating assets which have been marked to be expanded to more than 350 acres in the near future as well.

However, as always, there are challenges to be met and overcome.

“Scalability is now the biggest challenge in the controlled environment agriculture space,” said Chen. “We are proud to partner with and invest in the best-in-class advanced technology greenhouse operators in North America, like AppHarvest and Revol Greens, to meet this exploding demand.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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