Blue Sky Agricultural Fund III to target A$12m – exclusive

Investors in Blue Sky Agricultural Fund III are likely to be high net worth individuals, family offices and mid-size funds.

Australian alternative investment manager Blue Sky aims to raise about A$12 million ($9.25 million; €8.24 million) from family offices and high-net worth individuals for its latest vehicle, investment director Michael Blakeney told Agri Investor.

Blue Sky Agricultural Fund III will focus on assets supplying grain to or held within Kialla Pure Foods, an organic grains processing company and exporter based in Queensland. It will invest in water assets, irrigated farmland, milling infrastructure and industrial land and have a lifespan of four to six years.  The project will be a co-investment between Kialla and the fund, with Blue Sky potentially exiting its minority stake in Kialla in four to six years.

“Our exit is focused on growing the agribusiness and when appropriate selling our share, to either a trade buyer or secondary/fund that is aggregating these type of opportunities,” said Blakeney.

Assets including land and irrigation infrastructure will be converted to certified organic production. They will be managed by Kialla, whose management team will have the option to stay on after Blue Sky’s exit.

Last year, Kialla cut its budget by 30 percent, partly because it could not source enough organic grain to supply its markets, reported local paper Queensland Country Life. Blakeney said that demand from Asia was driving expansion in the value-added category among Australian producers, with farms converting to organics in order to catch up with demand.

Blue Sky Agriculture Fund II, invested in a vertically-integrated citrus project, closed A$10 million last year. Its Fund I held a final close on just under A$9 million.