Agri investments Down Under continue to pull in LPs

A report from law firm Minter Ellison published earlier this month highlights how food and agriculture businesses have become a significant area of focus for investors in Australia.

Titled Scaling new heights, the report found that managers of private capital generally are “getting back to business in Australia with renewed confidence and enthusiasm” after a challenging 18 months.

Interestingly for our universe, agribusiness was named as the fourth-most attractive sector in terms of opportunities, with 77 percent of investors naming it as among the most attractive, ranking behind only technology, healthcare and consumer products.

This also placed agribusiness just ahead of the usually more-popular institutional investor targets of infrastructure and real estate, with energy and resources languishing at the bottom of the pile thanks to the perceived risks in that sector.

Explaining the reasons for this, the report said: “Australia’s agricultural sector is internationally respected and makes a sizeable contribution to the economy. Equally, Australia’s geographic proximity to Asia means its agribusiness industry is ideally positioned to meet rising demand from the expanding middle class across the region.

“A portfolio of free trade agreements have also opened up markets for its produce beyond Asia-Pacific.”

None of that will come as a surprise to investors with any experience of the space, as these are the exact reasons that have made investing in Australia an attractive proposition for some time.

Also noteworthy, though, is how much overlap there is between investments in agribusiness and some of the other key themes that the survey respondents identified as being important to them.

The most significant is the continued focus on ESG, with 80 percent of respondents saying that investors are taking ESG and climate change very seriously in their investment policies and practices. Further, 32 percent of respondents said that LPs would perform a deep dive into ESG performance as a priority.

This dovetails neatly with ag investing of course, with sustainability cited as among the most significant thematics attracting investors to the asset class by more or less every fund manager we speak to at Agri Investor.

Also noted was the attractiveness of real assets and property in general after a tricky start to the pandemic, as well as the status of Australia as “the first port of call when investing in Asia-Pacific” for US and Canadian investors, with both those pools of capital continuing to commit significant amounts of capital to Aussie ag.

Venture capital is on the up, too, the report found, with the increase in Australian agtech investment in the last couple of years evidence of the knock-on effects for our sector.

“Australia is indeed positioned for a strong and increasingly bullish year ahead,” Minter Ellison says in its conclusion – and agriculture fund managers are among those relishing the period in front of us.