Angolan SWF invests in farms across the country

Angola’s sovereign wealth fund Fundo Soberano de Angola (FSDEA) is investing in 72,000 hectares of farmland to boost food security and diversify its crude oil-reliant economy.

The $4.56 billion fund has secured concessions for seven large-scale farms from the Ministry of Agriculture as part of a $250 million commitment to the agricultural sector. The land will produce crops aimed at reducing food import volumes, and will be spread across Bié, Cunene, Malange, Moxico, Kuando Kubango, Uíge and Zaire provinces.

“Investors are invariably interested in balancing risks and returns,” FSDEA chairman José Filomeno dos Santos said Monday. “Direct investments in agriculture [represent] an opportunity for stable long-term returns and a way to diversify away from the risks related to the traditional assets held in the portfolio.”

The investment will also give Angola exposure to downstream soft commodities markets, the fund said in a statement. It did not provide specific financial details for the concessions, but FSDEA previously disclosed that Swiss private equity firm Quantum Global has been mandated with $1.4 billion to invest in timber, agriculture, mining, healthcare and structured capital through five separate funds.

FSDEA also invested about $22 million in an 80,000-hectare eucalyptus concession in the Planalto region this year, part of a $220 million timber allocation designed to diversity asset class exposure and provide employment in rural areas, according to FSDEA.

Investment in agriculture and timber comes as a wider push across the continent to shore up food security, develop stronger supply chains and generate employment. In June, the African Development Bank launched a new agribusiness development strategy in Africa, which would need $400 billion in investments from African and international finance institutions in the next ten years. The World Bank also confirmed in 2014 that it would offer the Angolan government $1 billion in finance to develop its agriculture sector and related infrastructure.

Aly-Khan Jamal, a partner at Dalberg, one of the bank’s consultants on the strategy, told Agri Investor this year that African sovereign wealth funds were expected to be an important source of commitments to agriculture by AfDB, with governments looking at foreign exchange and diversification of economic growth sources.

Dos Santos said that a growing middle class, rising income levels and urbanisation meant farmland investments were expected to earn increased net returns over time. He expects returns of 8 percent plus over 10 years on an annualised basis, he told Reuters.

FSDEA has about 60 percent of its portfolio allocated to private equity funds dedicated to domestic and regional investment opportunities.