Agriculture-focused managers need to boost their returns in order to attract more institutional investment, one of Australia’s largest pension funds told Agri Investor’s Australia Forum.
Nick Chapman, senior investment analyst at the A$56.8 billion ($43bn; €38.5bn) UniSuper, said agriculture has to perform better to be a successful asset class. He said institutional investors such as UniSuper look for quality cashflow and predictable growth prospects, and suggested greater scale is key to improved ag performance.
“As consolidation continues and the industry scales up, that is where we would develop an appetite for agri investments,” he said. The pension fund is yet to allocate to the asset class. “Size is one, and maintaining good relationship with specialist advisors and managers is also key to making an agri asset investor-ready because institutional investors will need external help on agri investment expertise,” said Chapman, who said UniSuper prefers Australia-focused assets.
Chapman said long-term contracts with pre-agreed prices for agri produce can also significantly de-risk the volatility of returns and create a CPI-linked business model.
Casey Morecroft, director of food, beverage & agribusiness at ANZ echoed Chapman, saying investors have been hesitant to invest in agriculture due to volatile returns, while Dania Zinurova, director of manager research at Willis Towers Watson said that without a flexible investment strategy “it will be hard (for institutional investors) to find a place for agriculture.”