Aquila’s dairy fund holds undisclosed first close – exclusive

Aquila Capital Farms will hold the first close of its Australian dairy fund tomorrow, but it will not disclose the amount the fund has closed on because it does not want to impact farmland prices, a spokesperson told Agri Investor.

Sources close to the matter have previously said that the fund would hold a final close on $200 million at the start of the year, but the fund manager is keeping the fund open for longer as investors continue to consider commitments, according to the spokesperson.

The first close is a move away from Aquila’s initial aim to hold a ‘one-and-done’ close when it launched the fund at the beginning of last year. It wanted to pursue this strategy to take advantage of a limited opportunity to buy distressed dairy farms, Stuart MacDonald, managing director of Aquila told Agri Investor at the time.

But last month, Detlef Schoen, managing partner of farm investments at Aquila, said that the pressure to deploy had been reduced due to a pull-back in milk prices.

Despite initial targets of $400 million, the fund’s internal target was always $200 million, according to a source close to the matter. The hard cap is $400 million, they added. It is understood that some institutional interest in the fund has come from the Mediterranean, according to a source close to the matter.

Australia’s dairy industry has been the subject of some criticism among asset managers operating in other dairy markets, particularly New Zealand, due to inefficiencies in the supply chain, unappealing weather and the cost of feed. But Australian managers point to an appealing entry price and opportunity for improvement.