Norwest Equity Seeks Agriculture Asset After Sale to BASF

Norwest Equity Partners, the 51-year-old buyout firm based in Minneapolis, said it’s seeking more assets in biological crop care after selling Becker Underwood to BASF SE for $1 billion a week ago.

Even with heightened demand among agrochemical companies for biological products to boost yields and protect crops, private-equity firms can find targets that haven’t yet attracted attention, Tim DeVries, a partner at Norwest Equity, said yesterday in a phone interview.

The sale to Ludwigshafen, Germany-based BASF, completed Nov. 28, coincided with a spate of deals in the pesticide and fertilizer industry, with traditional producers such as Bayer AG and Syngenta AG buying companies offering technology based on bacteria, enzymes and biotechnology. Norwest Equity plans more acquisitions as the market for using bacteria rather than chemicals to help crops’ growth is on the “cusp of a revolution,” DeVries said.

“This is an area whose time has come,” said DeVries, who started out in agricultural investments by buying farm-equipment makers in the 1980s. “The use of this family of biological products is going to be more and more mainstream. The guys that jump early on this stuff are really going to prosper, even at what appears to be a frothy price.”

The private-equity industry is finding new potential in agriculture after the commodity nature of the industry and volatile pricing deterred investors, DeVries said.

Developing Technology

Norwest acquired Ames, Iowa-based Becker in 2004. The buyout firm increased research and development to focus the company on its coating technology to enhance the shelf-life of rhizobium bacteria to allow farmers to combine the nitrogen-fixing yield-improvement agent with seeds rather than spreading it on the soil.

Industry transactions this year have included Bayer’s $425 million acquisition of Davis, California-based AgraQuest in July and Syngenta’s purchase in August of a $286 million stake in Agrinos, a Norwegian biological crop-additives company that plans an initial public offering next year. Basel, Switzerland-based Syngenta is also about to complete a $523 million takeover offer for biotech seedmaker Devgen.

Norwest also owns Poet, an ethanol manufacturer that’s building a second-generation cellulosic plant with Royal DSM NV. Other assets include plant-nutrient developer Actagro as well as a stake in chemical distributor Univar, owned by Clayton Dubilier & Rice LLC.

“We have a number of Beckers in our portfolio” in a range of industries, DeVries said. “We’ll find something else.”