Aberdeen eyes agri through fund of funds run by former FLAG team

Global investment manager Aberdeen Asset Management has raised $268 million for a vehicle which has included at least one farmland fund in its fund of funds strategy, according to a regulatory filing and a 2016 description of the fund published by the firm.

The fund, Aberdeen US Private Equity VII, has a target of $300 million and has secured commitments of at least $100,000 each from 73 investors since its first sale last February, according to a filing on February 8.

In a description of the fund published in 2016, Aberdeen wrote that the US Private Equity VII fund constituted a continuation of a strategy followed by FLAG Capital Management, a real assets and private equity and real asset manager that the firm acquired in June 2015. The vehicle is to be managed by the legacy FLAG private equity team, according to the description, and is offered as part of the firm’s efforts to offer investors “strategically constructed portfolios.”

“APE VII will focus on the less efficient ‘small buyout’ segment of the private equity landscape – a segment that Aberdeen believes offers attractive outperformance potential, but which many investors have particular difficulty navigating and accessing on their own,” said Aberdeen. “APE VII is targeting a $300 million fund that will include both primary fund commitments and a 15 percent to 20 percent allocation to direct co-investments and secondaries”

Among the executives listed on the filing for Aberdeen US Private Equity VII is head of real assets James Gasperoni, who served as partner at FLAG in charge of global real assets for nine years. That ended when he joined Aberdeen as part of the acquisition.

Aberdeen declined to comment.

First seeds

Among the ag managers known to have been backed by FLAG through previous funds is Homestead Capital, a San Francisco-headquartered farmland investment firm. FLAG was reported to have been an investor in both Homestead’s first fund, which closed on $173 million in 2015, and its second fund, which closed on $400 million last year.

In an overview of farmland investing published last year, Aberdeen presented the similarities and differences between the institutionalization of timber and the likely path forward for farmland, a theme Gasperoni discussed with Agri Investor in 2016. While the comparison has gained purchase among many in the investment community, according to the paper, the differences in the ownership base of each asset means the markets are likely to follow different trajectories.

“The majority of timber assets were owned by corporations whose sole purpose was to maximize shareholder value,” Aberdeen wrote in the paper. “Given the family ties involved in the farmland sector, there may be multiple interests (not just financial) that could potentially create challenges in the ownership shift to purely financial owners.”