AGR targets up to $300m for third fund – exclusive

Agribusiness-focused TIAA subsidiary AGR Partners is targeting between $200 million and $300 million for its third fund, according a source familiar with the fundraise.

Nuveen Agribusiness Fund III had raised at least $77.3 million through commitments from at least 13 investors since its first sale in late July 2019, according to a late July regulatory filing.

AGR declined to comment.

The source told Agri Investor the vehicle continues a series of funds previously referred to as the TGAM Agribusiness Fund, the second iteration of which closed on $300 million in 2017.

Fundraising for Fund III, the source said, will focus on pension plans, endowments, sovereign wealth funds and family offices in the US, Europe, Asia and the Middle East.

Though AGR pursues something closer to a traditional private equity strategy, the source explained, many investors nonetheless classify midstream agricultural investments as extensions of real asset or infrastructure allocations.

“Today, there are very few real asset and infrastructure investors in the midstream agribusiness area, but I see more here this year than I did last year, more last year than the prior year. If I go back 20 years, it is the same progressively,” the source said.

“Still, we do not see a lot of competition. If I talk to people in other real asset strategies or infrastructure strategies in other industries like oil and gas, the competition [for agribusiness allocations] is probably less than one 10th or one 20th of the competition for allocations that are in other industry areas.”

The source characterized the current fundraising environment as similar to 2009 and 2010, when agribusiness’ lack of correlation to the broader economy in the aftermath of the global financial crisis drove an increase in LP interest.

“Investors very much like that the sectors that we focus on are essential and these businesses have continued in this period [covid-19],” the source added. “The performance shows that the underlying investments are uncorrelated to a lot of other asset classes that the investors have exposure to.”

Fund III will follow the same largely non-controlling equity-focused strategy as its two predecessors, according to the source. They added that investments from the vehicle will similarly focus on both healthy offerings and investments designed to meet increasing protein demand in emerging markets.

The regional focus of investments from Fund III, according to the source, will likely remain mostly on the US, with some scope for transactions in other OECD markets like New Zealand and Australia.

AGR was founded in 2012 and is headquartered in Davis, California. Its portfolio includes South Carolina peach production and processing company Titan Farms, Santa Rosa, California wine company Vintage Wine Estates and Opal Foods, which provides generic and specialty eggs from facilities in Missouri and Colorado.

The source confirmed that in June, Opal sold its interest in Central Valley Eggs, a cage-free egg-focused joint venture in Wasco, California, to Proterra Investment Partners for an undisclosed sum.

AGR and Proterra declined to provide more detail about the Central Valley Eggs transaction.