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Josh Ziegelbaum discusses the Green Coffee Company, which is purchasing land and developing the infrastructure with a goal of becoming the largest producer of coffee in Colombia.
Interested In Learning More About This Opportunity?
You can visit the Official AltsDb Partner Page for the Green Coffee Company to:
- Learn more about GCC’s strategy;
- Learn key details about the project; and
- Request more information from the sponsor.
- An overview of the Green Coffee Company and the Legacy Group.
- The opportunity to invest in the Colombian coffee market while working with U.S. operators.
- An overview of the core business model, which involves acquiring land and developing infrastructure.
- Details of the current offering, including preferred returns and fee structures.
- Key milestones for the Green Coffee company over the next several years.
- The unique opportunity to invest directly in agriculture in a foreign country with a U.S.-based structure.
- The Green Coffee Company team, which includes decades of agriculture and various strategic partners.
- How rising commodity prices improve financial projections for Green Coffee Company.
- How investments in infrastructure translate to consistency and quality products.
- The economics of the coffee business, and hos this could translate to an IPO in 2025.
- Discounts offered to Series B investments.
- Live Q&A with webinar attendees.
The Legacy Group is an alternative asset manager that targets profitable investment opportunities with high social and environmental impact in Latin America.
Learn More About Legacy Group
- Visit Legacy-Group.co
- Visit the Official AltsDb Partner Page for Green Coffee Company to request more information
Jimmy: Next up is going to be Legacy Group. We have Josh Ziegelbaum, Josh is gonna be presenting Legacy Group’s Green Coffee Company. It’s a consolidated coffee farming operation based in Medellin, Colombia, and a top-three producer of coffee in all of Colombia. There you go, Josh, how you doing?
Josh: Hey, Jimmy, how you doing? Doing great. How are you?
Jimmy: Good. Josh, it looks like you’re all set. Please, take it away.
Josh: Well, thank you all for joining us here at Alts Expo, 2021. I am very excited to be with you all today to present this incredible opportunity to invest in the Green Coffee Company. A top-three producer of coffee in the entire country of Colombia, which we have a goal of taking public in U.S. markets through an IPO.
A few things before we get started here, I wanna touch on a few points that you see on the introductory slide. First would be CEA Colombia, that would be the Council for American Enterprises doing business in Colombia for which GCC is a member of. We sit at the same table as the likes of other multinational corporations, such as Coca-Cola, Pfizer, GE. This really gives us a lot of influence in the region. We have access through the U.S. embassy. It truly means a lot to the business.
Second would be the one in the bottom left, which some of you are probably familiar with, the green frog, that would be Rainforest Alliance Certification. All 11 of the Green Coffee Company’s farms are Rainforest Alliance certified. We’ve gone through rigorous ESG standard tests with multiple visits to the farms. So that was an important feat for us that we recently did. Also, we have a cafe practices certification, which essentially means that the product on the farms meets the standards to be sold to the likes of a Starbucks.
So, once again, my name is Josh Ziegelbaum, Director of Investor Relations at Legacy Group. We serve as the asset manager for our portfolio company, the Green Coffee Company. My role at Legacy Group is to handle investor communications, onboarding, and record-keeping. Our role as an asset manager would be to provide strategic management decisions, fund accounting, legal structuring, as well as to liaison information and updates to our investors. We do that in multiple mediums. We have a formal quarterly investor update that we send out in the print. We also do a quarterly and update webinar where we answer Q&A in a live format. And then also, we host things such as this at different events. And then we have our email newsletter which is sent out which I did encourage you all to subscribe to.
So let’s dive into the deal that we have. So the Green Coffee Company at a glance, our goal from the start has been to open the Colombian coffee industry to investment for those who are seeking outstanding returns in a market and industry they otherwise could not have access to. This is all while working with US-trained company operators. A few things that are important here, it’s a US-based business, it’s a top-three coffee producer in Colombia. We’re producing a specialty coffee product, which means it could be sold at premiums above what you see at commodity spot prices. And then the core business model itself would be to acquire farmland, consolidate and develop infrastructure, world-class infrastructure, which we’ll get to in a moment, and then sell coffee further down the value chain.
So some key stats on our landholdings, we have over 2,300 acres of coffee farms across 11 groups, just about 3 million trees in the ground, multiple processing facilities. The sales model would be wholesale. Essentially, we sell containers of unroasted coffee, both domestically in Colombia and then internationally outside of the country. The location of the farms is in Salgar, that would be about two hours driving outside of Medellin, and if you’re fortunate to take a helicopter, that’s, more or less, 15 minutes or so from the city of Medellin to our farms in Salgar. And then as mentioned on the quality scoring high, which means that we can command premiums above commodity prices.
So, 2021 was truly an incredible year for the Green Coffee Company. We first fully funded our $9.6 million Series B offering which positioned the business with the capital needed in order to achieve its planned expansion. That capital allowed us to become the most technologically advanced coffee producer in the entire country of Colombia. I’ll be showing you some more details on that momentarily. We’ve now launched a $3.5 million upsize to our series B round so that we can accelerate the timeline to becoming the largest coffee producer in Colombia. Our investors are so excited about being involved with what we’re doing, and this upsize gives you all the opportunity to come along with us on our journey.
So we made the investment process as easy as possible in this US-based offering, and of course, as you can imagine, we have limited equity outstanding. Due to the incredibly high demand from our investors, we already fully funded this initial 9.6 raise, and we just extended this $3.5 million extension, which specifically is gonna be used to accelerate our timeline of business expansion through farm acquisitions. We actually have $1.4 million already funded out of that $3.5, which leaves just about $2 million remaining for you all today. Our team has identified several potential farm acquisition targets, one of which is currently a front runner, and all new funds with this upsize will be used to accelerate that timeline to get to the number one spot in Columbia as its largest producer, and as early as Q1 of 2022.
Something I wanna mention to you all, we’ve had multiple of our earlier seed round investors up their commitments by 500k or more in this Series B round, that’s really a testament to the work that we’re doing, the level of communication we have and the progression of the business over the years. Last month, we actually funded over $3.5 million in investor equity, therefore I expect this remaining piece to be available for an extremely limited period of time.
So where we’re going is really what we should all be excited about. So we set three critical milestones for the business over the next few years as we look towards the future exit through a sale or more preferably an IPO. The first milestone has already happened, that would be to finish this capital raise, deploy that capital into world-class infrastructure so that we could meet the demands of our most sophisticated coffee buyers. The second milestone to that would be to expand in 2022 through additional acquisitions and become Colombia’s largest coffee producer. The third and final milestone that you see here would be to build our B2C business through US coffee roaster acquisitions, which we believe will position the business for sale or IPO, in 2025.
So why am I spending my time on this? Why Columbia? Why coffee? Those are all great questions. So first off, I’m really passionate about giving access to unique one-of-a-kind opportunities such as ours. Nobody has a deal like this where you can invest directly into agriculture in a foreign country, such as Colombia with a US-based structure. It’s truly a pure play on the explosion of the coffee industry today. The industry itself, two and a quarter billion cups of coffee are consumed globally on a daily basis and growing. It’s actually the second most traded commodity on Earth. Colombia, third-largest coffee-producing nation, it’s synonymous with coffee. It’s actually the national product there. So besides having our own capital in the GCC, which we have significant skin in the game on seven figures, we have multiple friends and family members who have invested. So our goal is really to do right by investor base, and that ensures that our interests are aligned, of course. We have a very attractive return profile. It’s also an impact investment. And for those of you who invest in real estate, the landholdings have a collateralization component similarly, to what you’d find in a real estate investment.
So the team really makes this special. I’m gonna touch on some of the key team members that we have here on the slide. So we have the correct team in place to execute from both an operational and strategical standpoint. So first, we have Boris Wullner. He is a board member of the GCC, he also serves as its president. Boris brings decades of combined experience in agriculture in Colombia, about 25 years of that. Prior to working in coffee, he was working with fresh-cut flowers, which for those of you that don’t know is actually the most sophisticated agribusiness in Colombia. So Boris has taken a lot of these innovative strategies from the fresh cut flowers business, also from more sophisticated coffee growers in parts of developed Europe, and he’s been applying those at the farm level with GCC. We really have a strong innovation component to our overall strategy here which Boris has done a great job of spearheading for us.
The other two board members that we have you see to his right, they are also partners at Legacy group, Cole Shephard and Adam Jason, both of which I work with on a regular day-to-day basis at Legacy group. Cole was the founder of the GCC. Prior to doing so, he had an international career as a corporate accountant, formerly at PWC, in a wide range of roles, mostly M&A, which is really applying in order to help accelerate the growth of our business. Adam Jason, full career as a corporate lawyer advising some of the largest investment banks in the world on both public, private equity, and debt issuances.
And below them to the left Chris Kelly, very strong addition to the team. Chris came on as a strategic advisor for us. He currently is a partner at Jones Day, it’s one of the world’s largest and most recognized law firms. And Chris has repeatedly been named one of the best lawyers for business. So we’re very pleased to have Chris involved.
And then to his right, Marino Restrepo, chief agronomist, really handling the way in which the coffee is grown at the farm level. Prior to joining us, he was the agronomy director for Starbucks in Colombia. Leonardo Sanchez is our CFO. Prior to us, he was working with Fox in Latin America. We have an international sales team spearheaded by Jordan Crosthwaite. And then myself and Robbie of Legacy Group which you see at the bottom here. So like I said, very strong team. I’m so confident in our ability to execute on the business plan, and from both, operational and strategical standpoint.
So, many of you are probably aware of what’s going on in the commodity space. We all see rising prices in the supermarket and pretty much everywhere we go, right? So surging commodity prices are benefiting us as a producer at Origin. This chart here was made under a month ago, as of this week, coffee prices actually exceeded $2.40 a pound. It’s been an even larger move in the last 30 days. This is the highest the price has been in 10 years. It’s only been this high three other times over the past four decades. So our projections in the deck, which were based on our returning profile off of, are based on a commodity price of $1.90 a pound which we by far exceeded. Producers at Origin, such as Green Coffee Company, continue to benefit from these upward pressures on prices, among other reasons. Our investors love this opportunity be it that it’s a hedge against inflation.
So in terms of our infrastructure, we’re building the most technologically advanced infrastructure in Colombia. It’s the largest investment in coffee infrastructure in Colombia in the last five years. We’re bringing world-class techniques from Brazil and developed Europe applying the method GCC in Colombia. And this is important because consistency is everything when it comes to specialty coffee. This facility that you see here is the first of two. This has already been constructed. We have the money needed in order to do this. It’s part of the initial $9.6, it’s already been raised so that capital was being effectively deployed as we speak. These photos here were taken at the processing facility that I just mentioned. We had an inauguration event on October, 28th. You can see the quick timeline of start to finish on the construction, just July and August, the original structure was removed and a new foundation was established. And then several months later on October, we already held our inauguration event. So incredible speed that was executed here. This is our first of two new state-of-the-art processing facilities, the other identical ones being constructed now. Between the both, we’re gonna be producing a massive amount of coffee both from our own farms and from surrounding farms through a coffee cherry buying program. So we have all the money needed for this infrastructure, your investment capital would be going towards further farmland expansion.
So, I have a nice little intermission plan for you all today. I’m gonna be playing a short two-minute video from our newly opened coffee processing facility so you can see some of our infrastructure in action to give you a sense of the scale and size of the facility.
So, this $2.7 million facility can process 400,000 kilograms of cherries per day and uses 75% less water than a typical mill, and it’s the most technologically advanced wet mill in Colombia.
So who are our clients? So we trade with some of the largest commodity houses in the world at premiums to commodity prices. There are two primary sales channels for the business. First would be the large domestic buyers in Colombia, and then second would be the international importers and distributors. In our projections, including the most recent deck, we forecasted $1.90 a pound for our sales internationally. We’re currently selling substantially higher than that. Sucafina, which you see here on this slide, they are the sixth-largest coffee buyer globally, one of our most substantial international clients. They recently purchased coffee from us at $2.60 a pound. Additionally, we’re selling to other international buyers at high margins. What’s happened really at the drastic fall and supply of coffee coming from Brazil, among other reasons, they’re the largest coffee producer currently, that’s pushed coffee prices higher and we expect that trend to continue.
So milestone two. This milestone brings scale and profitability to our business. Acquiring farms next year in regions outside of Salgar will allow for year-round harvest and more stable revenue streams. This is where our investors truly benefit from economies of scale. I’d like to remind you that this is what you’d be investing in here, the expansion through milestone two.
So this slide here, this is what the business will look like under the scenario in which we simply execute on milestones one and two. Finalizing this capital raise, deploying that capital, and becoming the number one coffee producer and the third-largest coffee producing country. As you can see, production will accelerate, landholdings will increase, number of trees more than double. However, milestone three, this is what we want to do, this is the real opportunity, and why I’m here. This is the most important part of the presentation, our path to a U.S. IPO. After becoming the number one producer in Colombia, we believe the most value will be created for investors by acquiring US-based roasters with established sales channels for our farm-direct coffee. You might ask, why would we do that? Well, there’s more profit going further down the value chain. The most value is created with a branded product and sophisticated wholesale distribution channels. I personally got to Miami spent $20 on a bag of specialty coffee, out on a wholesale basis, what you see here is reasonable to expect on the low end. A bit more about the numbers, you could see our all-in cost for green coffee at about $1.20. So at a target sales price of $2 that leaves a margin of 80 cents. And then you could see the all-in cost at roasted coffee much healthier margins even at the conservative price estimate. So that same pound of coffee, you can make $4 to $7 as opposed to 80 cents in the unroasted product.
So what would an IPO look like for our investors? So there are no direct comparable companies to the GCC, absolutely zero exact replicas. However, we’ve identified several that have some similarities. Both Oatly and Duckhorn Portfolio control agriculture, they control a B2C product, and they’re also similar to us because of the sustainability component. Both Oatly and Duckhorn have gone public here in 2021 at massive valuations. Even if we were able to achieve the low end of that it would be huge for us and our investors. The IPO market is very hot right now and we fully intend on capitalizing on that.
Another example, which isn’t on this slide is a company called NuZee out of Austin. They only roast coffee which is just a part of our business at the Green Coffee Company. In 2020, they did just $1.5 million in sales and posted a nine and a half million dollar loss on that. Just a few weeks ago, they had a $100 million valuation on the NASDAQ. So we will be profitable this year with substantially higher sales at exit valuations such as the one NuZee had, although not guaranteed, are certainly possible for our investors as well.
So how does this all translate to investor returns? With this projected valuation at exit, we expect investors to achieve a 48% IRR and receive distributions regularly until exit. This works out to 7x return on your money on the investment which is conservative based on where markets are today by a substantial margin. We don’t see dramatic changes in monetary policy, one could argue that markets will remain hot. This return is what gets me excited and being able to add this amount of value for our investors is truly rewarding for me. I haven’t seen anything like this and I can assure you that nobody has a deal like this. So based on sales contracts actually we recently entered into, NCCs projections were made. There’s also been a sharp increase in coffee commodity prices. We have the potential to further enhance the returns beyond the forecast of this slide.
So we do a lot of things around impact. We actually have an entire deck on this, which I’d be happy to share with you upon request. The GCC is most certainly an ESG product. I recently had a chance to take a helicopter tour out to the farms, and the team was so nice and grateful for the work we’re doing. It’s something really special, you have to see it to believe it, you could just tell that the employees are passionate. We do this because it’s the right thing to do, and also it creates value based on ESG trends in the market.
In terms of the employment, like formal employment might sound like something normal to all here, normal to all of us in the U.S., but in Colombian coffee, it’s just non-existent. It’s a very fragmented business, informal employment. So what we’re doing, we’re paying above market wages. We’re providing health care, pensions, we’re paying people through bank accounts, we’re doing a lot of things around worker well-being and it shows in the satisfaction of the employees.
Also from an environmental standpoint, biodegradable planting methods have been implemented. We also promote biodiversity. We’re really a large powerhouse in the local economy, even the largest employer in Salgar. The points at the bottom are the sustainable development goals set forth by the UN, and those six that we have here are the main ones that we touch on at the Green Coffee Company.
So these photos that I have, we’re just taking this past week at the farms of the Green Coffee Company. As you can see, we truly promote worker well-being. Our employees are happy to come to work. Their uniformed with the proper clothing in order to do their jobs effectively. We also promote biodiversity as I mentioned on the previous slide, which is one of the many ways in which we set ourselves apart.
So I just wanna emphasize on this slide that the share price now is the same as it was back in June when the initial series B commitments came in. The business is much more valuable today having 10 million in equity raised in this round, and the infrastructure bill and acquisition targets diligence.
So finally, I’d like to share a tiered discount program for our series B investors. We do have a $100,000 minimum investment but these are the share price discounts that we offer at the various thresholds. And due to the very high demand of the equity in this offering and limited availability, I’d expect both the shares and the discount program to be gone quickly. So we’re having conversations with multiple investors, who could pick up the entire remaining equity, these guys definitely have the capability to finish this raise off. Therefore, we expect to be done or near done in the next couple of weeks. So I’d like to encourage you all to reach out as soon as possible if you’re interested in participating.
So I wanna thank you all for your time and your interest in this one-of-a-kind investment offering. You’ll find my contact information here on this closing slide, as well as a link to our website. Please, don’t hesitate to reach out to me directly after this presentation. If you’d like to participate as an investor in the Green Coffee Company, either send me an email with your preferred commitment amount or contact me in order to schedule a time to chat. So we’d love to welcome you as an investor in the Green Coffee Company, have you join us on our path to an IPO after becoming the largest producer of coffee in Colombia. So now I’d like to open up to any questions. Thank you, Jimmy.
Jimmy: Fantastic. Well, thank you, Josh. And yeah, we’ve got about eight or nine minutes for questions. I know we had a couple of people asking in the chat for your deck or for that impact deck that you have. So, David, and Matt, and anybody else, please, do get in touch with Josh. His email address is on the screen there. And I’ve also posted a link to their website in the chat, legacy-group.co. Wow, we’ve got a lot of questions here, like I said, about eight more minutes here. So, first question is, since this offering is in Colombia, would an investor in the U.S. receive a normal K-1 or what kind of tax return forms does an investor in the U.S. get?
Josh: Yeah. That’s a great question, Jimmy. So it’s a US-based investment. So while the assets are primarily in Colombia, they’re owned by our operating subsidiaries. So your investment itself is in our Delaware LLC, which wholly owns all of the operating subsidiaries. We have that LLC tax as a C-corp, so you can expect 1099s when distributions commence, not K-1s.
Jimmy: Gotcha. 1099s but at least it’s a pretty simple U.S. tax form that any CPO would be familiar with, you’re not getting anything from Colombia, per see, sort of. So what about the Colombian government, do they potentially get involved? Is there any political risk?
Josh: Yeah. So all of our partners…the two partners at the firm live there, right? So, Cole and Adam, they both live in Medellin, that’s where they have their lives. They’re both American, initially, right? And actually, we had multiple investors come down and visit, they’ve seen the political climate, they’ve seen what’s going on. All of those investors that came have committed to the offering. We also have that CEA membership that I mentioned to you, that gives us a lot of protections from the embassy and access to information. We’re really operating at scale here. We had a massive inauguration event. There’s just a lot of foreign capital going into Colombia, $32 billion in foreign investments in the last 20 years, 47% of that coming in the last three years. So we really think that, you know, the political risk is very limited based on our experience and what we’re seeing on the ground.
Jimmy: Good to know there. Matt asks, can you elaborate on what makes this a green or impact investment, are the farms regenerative and/or organic? I think this question came in before you had that slide on how it’s impactful in green, but maybe you could go into that a little bit more.
Josh: Yeah. So, yeah, we’re doing it in several different ways. First is that the way in which we treat our workers and the worker well being which I elaborated on a bit. Providing formal employment is something that sounds reasonable to us here in the U.S., but it doesn’t exist in the Colombian coffee industry. So really, formalizing employment and doing right by our workers is one way in which we’re focusing on ESG. Another piece of the impact would be the environmental component. Usually planting is done in larger plastic bags, which are planted in the ground, like for a coffee tree, and we’re using a biodegradable process through Ellepot. So we have a technology there which is producing tons and tons of plastic waste in the region. You asked about solar, we’re in chats now with a firm that’s looking to potentially install solar. We don’t currently have it, but it’s something we’re exploring, it’s not an organic product, I heard you ask that. But we use very minimal amounts of pesticides, we spray directly at the base, and we really do what we can to limit the harm to the environment, while also promoting biodiversity.
Jimmy: Good. Let’s see. David asks, what is the investment minimum and increments?
Josh: Sure. Minimum investment is $100,000, it’s open to accredited investors. And we have increments for share price discounts at $250,000, $500,000, and $1,000,000 as I had mentioned in that previous slide. So we’re offering 2.5%, 5%, and 10% share price discounts off of our $700 a share offering price, should you meet those thresholds, but the minimum would be $100.
Jimmy: Good. Let’s see, anonymous person here asks in the Q&A, does your fund or investment pay a dividend?
Josh: So we are forecasting our first dividend to be declared in the first half of 2022, for the 2021 operating year, and we’re anticipating paying dividends on an annual basis through the holding period, that would be until 2025 on an average of 8% per year. That’s what we have forecasted.
Jimmy: Good. This next one is interesting one. Is GCC facing the same labor shortages in Colombia that we’re seeing here in the U.S. recently, or is that less of an issue there or more of an issue there?
Josh: I would say much less of an issue there. We’re not seeing the same labor shortages, there’s a lot of workers that wanna work, and as we’re arguably one of the best fairest employers in the region in the coffee space, they wanna work for us. So I would say, less affected by labor shortage than what you’d see in the U.S.
Jimmy: Gotcha. Let’s see. We got about three more minutes here. We’ll see if we can through a few more questions. If you do have a question, please do use the Q&A tool in your Zoom toolbar to submit any questions. A question came in here a few minutes ago, does the coffee company have any debt?
Josh: Very limited debt. We have 10 to 1 equity to debt right now, so it’s highly underleveraged.
Jimmy: Excellent. What’s the investment process look like? I’m not sure if this question is intended for an LP coming in, or maybe the actual fund investing, I suppose it’s just the single asset. So I think it’s probably from the perspective of an LP, what does that process look like for somebody who wants to come into the fund and invest?
Josh: Sure. So we’d, of course, first encourage you to reach out to us to access our investor presentation so you could review it. You can access that through our deal room on our website here that you see in the bottom, or send me an email. And then, essentially, when you decide on the commitment amount, we set up the documents for you through DocuSign for your review. You’ll review the investor and subscription agreements after we address any questions you might have. You sign those, we countersign. Upon receipt of the wire, we confirm and we set you up with our investor portal. So we have a new investor portal we just launched through InvestNext so we give you access there, you’ll be able to see your position same day that it’s funded. And then we made it very frictionless and simple through our U.S. entity, that Green Coffee Company holdings LLC.
Jimmy: Great. A question just came in from Adam. He asks if he’s ready to participate now, does he just email you his commitment amount?
Josh: Yeah, absolutely. If you’re gonna be investing in your personal name, I’ll need your full personal name and the commitment amount. If you’re investing through an entity, you give me the entity name and the commitment amount. That’s correct. You could send that right to the email you see on screen, [email protected]
Jimmy: Good. What about IRAs, is it possible to invest in your offering through a self-directed IRA?
Josh: Absolutely. And we encourage it based on the return profile that you see and the outsize returns, I think a tax-deferred IRA is an excellent strategy. We have multiple investors who have invested through a self-directed IRA.
Jimmy: And the final question here, and I’m sorry, there’s more questions than we have time for, we have to move along but I’ll try to get your questions passed on to Josh and he can answer them offline, or please do feel free to email Josh at the email address on the screen there [email protected] Last question, though, how do taxes work for investors with this investment structure?
Josh: Yeah. So you’d be taxed at your individual rate. So when we pay dividends, you’ll receive a 1099, so you’d be taxed just as you would on dividends from a publicly-traded company. It’s an identical structure. So it’s based on your individual tax situation. And then through an IPO, I mean, while that’s a liquidity event, in the event of an IPO, you’re not required to sell your shares, so you could realize liquidity on your own at whatever pace that you would like. So it’s really a function of your individual tax situation. But I would say it mirrors that of what you find in a publicly traded corporation.
Jimmy: Fantastic. Well, Josh Ziegelbaum with Legacy Group, thank you for participating. And thanks to all of our attendees once again for all the great questions. We’re gonna move along now with our next presenter. So Josh, thank you take care.
Josh: Thank you, Jimmy. Take care. Thanks, everyone.