Google ‘agribusiness consultants’ and you’re likely to be underwhelmed by the results. A lack of agri-focused investment consultants and bankers is something asset management firms and others have been complaining about recently.
One placement agent told me this wasn’t surprising: “Consultants do things based on economics – so there’s no reason to have someone focusing on agri unless, or until, enough clients are asking questions.”
Meanwhile, a buy-side professional at a large insurance company complained that investment banks were not covering the sector in any real detail. A couple of European banks initiated coverage of food and agriculture in the early noughties but stopped after a few years, he noted. “Why are they not looking at it? It would give far greater comfort to know they were there to underwrite deals for us like they do in other asset classes.”
The concern is that without a more fully developed agri investment consulting and banking landscape – including a vote of confidence from name-brand behemoths active in other parts of private markets – the agri asset management market will take much longer to develop.
It’s a valid concern, of course – but possibly a bit outdated given some recent market momentum I’ve been observing.
Firstly, it seems that an increasing number of notable consultancy firms are starting to put more of their resources into agri. Cambridge Associates is now tracking around 40 agriculture asset managers and has about 35 clients who are invested in the asset class or considering it. And about six months ago, Towers Watson incorporated agri into its model investment portfolio – the mix of allocations it recommends to clients – on the back of increasing client enquiries.
Secondly, accountancy firms such as BDO and Deloitte are also very serious about their commitment to the sector and even offer services beyond their usual remit; BDO, for example, will act as an asset manager in the sector if needed, as they are clearly seeing a lack.
On the banking side, too, institutions are starting to step up. Last week we published a Q&A with Abacus Emerging Markets, a new investment bank that has chosen agri as one of its four sectors of focus. And let’s not forget about UBS’s recent vote of confidence for the sector in Australasia. Yes, it’s the bank’s asset management business that’s active there, but together with its US-based UBS AgriVest, it’s clear UBS sees great value in the asset class – and as such it’s hard to believe it won’t find merit in further developing its agri coverage on the investment banking side. Surely its peers won’t be far behind.
What’s your view? Drop me a line at Louisa.email@example.com.