Tarlton Beetroot Business Plan — Conclusion and Investment Recommendation

What the numbers support, what they do not, and the terms on which the plan recommends proceeding.

Section 34 of 37

Conclusion and Investment Recommendation

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A financeable land-backed agricultural venture offering a low-to-mid teens equity return — and a poor fit for anyone underwriting to a venture hurdle.

The venture described in this document is real, the analysis behind it is internally consistent, and the returns are positive. It is also more modest, more capital-hungry and more exposed than the headline growth figures suggest, and this section states the recommendation in those terms rather than in the terms a promoter would prefer.

What the analysis establishes

The market opportunity is genuine but small. Year 5 output of 2,215 tonnes is 3.3 per cent of national production and roughly a fifth of accessible formal-channel volume in the catchment. The strategy is not to grow into a large market; it is to move a modest volume into better channels.
The value creation mechanism is credible and quantified. Blended realisation rises from R5.70 to R8.76 per kilogram through channel migration, with no assumed improvement in underlying market prices. This is the single strongest element of the plan.
The economics work at scale and not before. Gross margin reaches 47.4 per cent and EBITDA R5.79 million at Year 5, but ROIC of 9.3 per cent remains below the 15.4 per cent cost of capital throughout the horizon. The return is realised on exit, and a third of it is land.
The plan is under-funded as structured. The base case requires R5.56 million more than is committed. The R7.5 million facility is a condition precedent, not a contingency.
The downside case does not survive on committed capital and the stress case requires a restructuring. Land collateral is what makes the downside recoverable.
Price is unhedgeable and dominates every sensitivity. There is no forward market, no export outlet of scale, and no import competition. Contracted retail volume is the only available substitute for a hedge, and it is exactly what the plan is trying to build.

The recommendation

Proceed

For investors underwriting to a 12 to 15 per cent hurdle who value appreciating farmland collateral, tolerate a five-year hold with no interim distributions, and are able to fund or arrange the R7.5 million working capital facility. On base case such an investor earns 13.8 to 17.3 per cent depending on tranche, secured against a real asset.

Do not proceed

For growth equity or venture investors underwriting to 25 per cent or above. The frontier analysis shows no Series A entry price at which both tranches clear 20 per cent. This is a structural property of the venture, not a negotiable term, and the plan should not be pursued by such an investor on the expectation that better terms would fix it.

What would have to be true for a venture-grade return

Table 60 Conditions that would move the venture above a 20 per cent blended return

Condition	Effect on blended IRR	Assessment
Land acquired at R85,000 per hectare or below	+3 to 4 points	Achievable in a less favoured district, but likely at the cost of water security or distance to market — the two things the plan cannot compromise
Exit multiple of 7.5 times rather than 6.0	+4 to 5 points	Requires contracted volume and a strategic rather than financial buyer; not within management’s control
Phase 3 powder route proven and contracted	+2 to 3 points	Requires export or industrial offtake secured in advance; unfunded and speculative at this stage
Series A pre-money at R5 million or below	+3 points to Series A, minus 5 to seed	Redistributes rather than creates return; makes the seed round unraisable

None of these is within management’s control and two of them work against each other. The honest position is that this is a low-to-mid teens investment and should be underwritten as one.