Deals

Laguna Bay Agricultural Fund holds first close on A$280m

The firm's first co-mingled fund will target a range of agri assets in Oceania in order to ensure it does not overpay, its chief executive told Agri Investor.

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Queensland, Australia

Australian agri-focused fund manager Laguna Bay Pastoral has held a first close on its first co-mingled investment fund, Laguna Bay Agricultural Fund, on A$280 million ($208 million; €183 million).

The fund, which is aiming for a a final close in May 2017, will target agri assets in Australia and New Zealand.  The initial fund life is 10 years, but LPs will have the option to extend their investment. As reported by Agri Investor in 2014, the fund will target A$750 million and have a hard cap of $1 billion.

Laguna Bay is a co-investor alongside only US investors, chief executive officer Tim McGavin told Agri Investor. The only public investor is Washington State Investment Board, which said it would commit A$250 million in September 2015, with the ability to invest an additional A$50 million.

WSIB board minutes said the fund would have a diversified portfolio of upstream agriculture assets including row crops, permanent crops, protein, and water, and use buy-and-lease, joint venture or own-and-operate strategies.

It will now target commitments from institutional investors and pension funds around the world, said McGavin, holding several closes up to a final close in May 2017. He said the fund had taken some time to plan and raise, because the firm spent 12 months travelling to visit investors in order to create a “responsive and differentiated investment strategy”.

“Our first investment vehicle was a direct deal, discretionary vehicle,” said McGavin. Its investors included a mix of global institutional investors, pension funds and endowments. The vehicle, which invests in Australian permanent crops, closed on A$130 million in February 2014.

McGavin said the fund had a very broad mandate in order for the firm to be able to make opportunistic purchases. “We don’t want to be locked into any particular asset type that might be overpriced.” He said the fund had deals it was targeting, but did not want to reveal them for competition reasons. In general, he added that the investment team had experience in livestock, wine grapes, cropping, dairy and water titles.

“We are very opportunistic and going to move very quickly,” said McGavin.