Pure Harvest Smart Farms has its eyes set on scalability and growth after securing $50 million in funding through a sukuk (Sharia-compliant bonds) finance solution led by asset management and investment banking platform Shuaa Capital.
Completing the construction of two UAE-based facilities that would enable the technology-enabled agribusiness to produce 75 metric tons of fresh produce a week are among the expansion plans outlined by Sky Kurtz, founder and CEO of Pure Harvest.
“We will not only be increasing our capacity through these facilities but we will also be diversifying our offerings. We currently produce tomatoes and strawberries but we are building a highly automated leafy greens production centre to do arugula, spinaches etc,” said Kurtz.
Part of the Shuaa-led fund will go towards building a beachhead – a small market with specific characteristics that make it an ideal target to sell a new product or service – in Saudi Arabia which would mark Pure Harvest’s first facility in the kingdom and is expected to be complete in the third quarter of 2021, said Kurtz.
Over time, Pure Harvest intends to locally produce “pretty much everything that can be grown in a Mediterranean environment economically” including aubergine, capsicum and chillies.
Kurtz said he sees no reason why the business cannot expand internationally, proving that original start-ups can come out of this region.
“Pure Harvest is seeking to eventually move to other markets that face heat and humidity, not only in the GCC but also in markets such as Southeast Asia, Japan and northern Mexico because we believe that our solution has proven that we can overcome climate anywhere,” said Kurtz.
“We are not a derivative start-up ecosystem anymore. We are starting to see true innovation that offers solutions which can be exported around the world and of course will produce gains back in our home market in the Middle East,” he added.
The sukuk, anchored by Franklin Templeton Investments (ME) Ltd with a sizable investment from Sancta Capital, was complemented by a simultaneous $10 million incremental growth equity raise, led by Sancta Capital with participation from new and existing investors.
“There were two reasons why we went down the Islamic finance route. The investor universe is a much larger one and there is a big demand now in the market for new Sharia-compliant issuances,” said Natasha Hannoun, head of investment solutions at Shuaa Capital.
“Pure Harvest also lends itself very well as a business to the requirements of Sharia financing with regards to having assets to support the investment, for example,” she said.
The fund is reflective of the growing interest of debt capital and Islamic finance markets in the region’s SMEs and early-stage companies with growth potential, said Kurtz.
“Supporting SMEs in the region is extremely important especially that capital is not easily available to them so it is difficult to grow and become an effective part of the GDP,” added Hannoun.
“Obviously, the government has a lot of initiatives that support them but I believe we need to start seeing more from the private sector to really push that growth forward,” she said.
This financing solution is also reflective of the increased interest in sustainable investments which is on “everyone’s radar”, added Hannoun.
“We sit in the sweet spot of what the UAE and other countries in the region are seeking, which is a healthy form of economic diversification,” said Kurtz.
“We are attracting foreign direct investments and deploying capital, increasing the consumption of local fresh produce and displacing imports,” he added.
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