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Agcapita increases Fund V target – exclusive

The Canadian buy-and-lease farmland fund manager has increased Fund V’s target by C$15 million.

Canadian farmland fund manager Agcapita has increased the target of Fund V to C$35 million ($30 million; €24 million) in the wake of increased demand from accredited investors. The fund was initially targeting C$20 million.

Usually retail investor-focused, Agcapita has received strong demand from accredited investors for Fund V, in particular family offices. The firm is also expecting commitments from institutional investors to Fund V and a larger institutional investor-focused fund, according to Stephen Johnston, founder of the Calgary-based firm.

The institutional fund does not have a set target yet but will be capped at C$500 million, he added.

While pursuing the same buy-and-lease investment strategy, Fund V and the institutional fund are likely to target different parcels of land; in the past Agcapita has had to reject some large single parcels worth $10 million to $20 million because they were too large for its retail-focused funds, according to Johnston.

“We are confident larger amounts can be deployed,” he said. “The Canadian farmland sector is very deep with C$10 billion in liquidity every year.”

Agcapita is also unlikely to run into acquisition competition from Canadian farmland investment peer Bonnefield because it focuses on investing in Manitoba, Saskatchewan and Alberta, whereas Bonnefield does not invest in that region, known as the Canadian Prairies.

There are strict regulations on the type of investor that can purchase land in the Canadian Prairies, requiring a careful vetting process, according to Johnston.

Agcapita is also unlikely to compete with the Canadian Pension Plan Investment Board, despite the public fund’s understood plan to invest around $1 billion into Canadian farmland. Instead the public fund is a likely acquirer of Agcapita’s portfolios at exit, sources argue.