Agriculture Capital’s sophomore vehicle closed on $548 million in September, beating its $400 million target some 18 months after launch.
AC investor relations executive Atish Babu, who oversaw the fundraising, said that highlighting the firm’s operational capabilities was a pillar of its pitch on Fund II. Accordingly, encouraging potential investors to see those operations in person became an important part of its approach.
“I pushed for tours as much as I could. I told investors, ‘I will drive out. I will pick you up. Wherever you need to be, I will do it on a Sunday or a Saturday if we have to. If you want to make a site tour happen we are more than happy to’,” he said. “It brought to life a lot of words and documents and graphs and tables and charts.”
While not every investor that made a site visit ultimately committed to ACM II, Babu said he was fairly certain that every investor in the fund did make such a visit.
While he was careful to draw a distinction between AC’s focus on “regenerative agriculture” and the “impact investing” that has animated many recent discussions of the social aspects of financial investments, a focus on social and environmental responsibility clearly shapes the way the firm presents itself.
For example, the firm recently posted an “impact report” on its website, describing its approach as being driven by principles including producing healthier food, scaling up organic farming to make it accessible to more people and advancing responsible production.
Over the course of the time that the fund was in the market, Babu said he observed more investors asking about impact, in part because their qualification requirements had been expanding to include such considerations. He added that while certain investors were genuinely very interested to ensure their investment had a positive impact, others were not concerned with anything other than maximizing returns.
Interestingly, he said that AC found that input from both sets of investors was often the same and focused on steps designed to ensure the fund’s assets continue to perform well over the long-term in the face of myriad risks.
Babu said that while AC does invest in water conservation, workforce development and organic production, the firm is focused on sustainability only to the extent that it can help drive returns.
“We undertake certain things that the world may see as regenerative, not for the sake of regeneration or sustainability or impact, we do it because it drives returns and risk.”
Read the first part of our interview with AC’s Atish Babu, on public pension commitments to the firm’s second offering, by following this link