Agrogalaxy launches BRL 500 million strategy for cash purchase of pesticides

Agrogalaxy, a Brazilian company, has raised BRL500m in cash to buy the pesticide in a strategy aimed at gaining negotiating power for a better price. According to the agri-input distribution company, this strategy will allow for higher revenue margins, as well as allowing them to prioritize partner suppliers.

Larissa Pomerantzeff, senior advisor at Aqua Capital and a member of Agrogalaxy's board of directors, explains that in Brazil, the common practice is bank financing mediated by the pesticide industry. According to her, this makes the distributor dependent on industry funding, as it provides the payment terms.

Agrogalaxy aims to change that logic precisely by becoming more independent from industry-financed funding - a first for a company of its size in Brazil. The strategy was previously used in Brazil only for fertilizer and seed purchases.

The BRL 500 million funding was structured with fintech TerraMagna through an exclusive Credit Rights Investment Fund (FIDC) for Agrogalaxy. The FIDC is managed by Milênio Capital and has among its investors BV bank, as well as some family offices.

According to Bernardo Fabiani, founder of TerraMagna, the outcome of this exercise will determine if returns are attractive to investors, which could lead to an increase in the size of the fund.

Agrogalaxy closed last year with a line of merchandise suppliers totaling BRL 3 billion. However, this strategy by Agrogalaxy will not be applied to the entire inventory, as the company understands that if pesticide prices drop, as happened in 2023, it could cause problems.

(Editing by Leonardo Gottems, reporter for AgroPages)

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