AAM tops up Diversified Agriculture Fund with A$15m raise

AAM Investment Group is seeking a further A$15 million ($10.4 million; €9.2 million) for its AAM Diversified Agriculture Fund to invest in existing assets.

The Brisbane-headquartered fund manager said the capital raise would take the fund to A$100 million in size, with the additional capital to be used to purchase livestock and invest in “value-adding improvements” on three newly-acquired cattle and sheep properties in Queensland, including Terrick Station.

AAM added beef production to the ADAF portfolio for the first time in April 2020 with the acquisition of Terrick.

AAM held a first close on ADAF at its initial target of A$60 million in December 2019.

Managing director Garry Edwards flagged the fundraising in an interview with Agri Investor in April. He said then that the firm intended to do a small fundraise in Q2 2020 in order “to opportunistically do some transactions on ancillary assets to the areas we’ve already invested in,” with a larger fundraise pushed back to later in the year due to covid-19 restrictions on movement.

The newly-raised funds will also be used to support the operation of a newly-created wholly-owned subsidiary, the Australian Livestock Company, which will operate a cattle and sheep enterprise across Terrick and two other neighboring properties, Thornleigh and Moorlands. The enterprise will include both conventional and organic production systems within three years, AAM said.

“Investors are attracted to Australian agriculture because of the critical role it plays in supplying the basic human necessity of safe, nutritious food,” Edwards said in a statement.

“These new funds are used in part to invest in sustainable agriculture initiatives to improve the productive capacity of our assets, support rural and regional communities and meet the needs of consumers for efficient food production – significant investments that are often outside the capacity of landholders to fund.”

The fundraising will close on July 15.

Earlier in 2020, AAM finalized the purchase of two other seed assets for the fund: a 44.1 percent stake in its 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.

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.