AAM Investment Group has reached a first close on its Diversified Agriculture Fund after hitting its initial fundraising target of A$60 million ($41 million; €37 million).
The Brisbane-headquartered firm said the response from investors had exceeded expectations and the raising had been oversubscribed, and that this would allow it to push ahead with further investments beyond its initial seed assets in early 2020.
The Diversified Agriculture Fund was launched in November. It is AAM’s fourth vehicle, the firm having previously raised three single-asset funds in poultry, cattle and softwood.
The A$60 million raised will be used to fund the purchase of two seed assets for the fund: a 44.1 percent stake in AAM’s existing Southern Cross Poultry Fund and 100 percent ownership of the Sunshine Farms Aggregation, a portfolio of three mixed farming properties in western New South Wales.
AAM managing director Garry Edwards told Agri Investor that 100 percent of the funds raised so far had come from Australian investors, with a mix of high-net-worth individuals, small superannuation funds and other wholesale investors contributing.
He said that investors had fed back that the agriculture asset class was difficult to access, but that they were looking for experienced managers when deciding whether to commit capital.
“There are a lot of opportunities in the market at the moment seeking capital, so the key thing for them was that this is an opco propco [operating company/property company] structure, not just a property or real estate investment trust-style investment,” Edwards said.
“Concerns from institutional investors about accessing expertise was very much a theme. Most of our investors have participated in our earlier offerings and they’ve had a couple of years’ exposure to the type of returns you can get out of this asset class when you’re diligent in the assets you buy.”
Edwards said that being able to demonstrate the value of active management and how that adds value to the assets had been beneficial during the capital raising.
AAM will now bring forward investments in the beef and sheep meat sectors after strong investor interest. It will return to the market for a further capital raising in Q2 2020, where it is likely to seek another A$60 million to A$80 million before continuing to build scale over the next two years. The firm described its investment pipeline as “significant”.
The AAM Diversified Agriculture Fund has a target base case distribution yield of 7-8 percent per year and a target base case total return of more than 12 percent per year, according to a fund brochure.
The latest fund close takes AAM’s total assets under management to more than A$260 million.
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