Bonnefield Financial‘s sale of a majority stake to Walter Global Asset Management comes after more than a decade of developments that have reaffirmed farmland’s value to institutional investors, its chief executive said.
Tom Eisenhauer told Agri Investor he founded Bonnefield more than 12 years ago in response to early signs of growing interest in the food supply chain and concerns about stock market volatility, inflation and environmental disasters.
“Back in 2008, we felt: ‘Some of this stuff might happen.’ Well, guess what? It’s all happening and in a such stronger way than we ever could have conceived,” said Eisenhauer. “Twelve years later, not only have they all been validated, but they are all even stronger than they were back then.”
Financial details were undisclosed for the sale of an unspecified majority stake in the Toronto-headquartered farmland manager to Walter GAM. The acquisition involved a stake previously held by Bonnefield co-founders Colonnade Investments, an Ontario-headquartered growth equity firm.
Eisenhauer explained that during the early years of the Bonnefield’s development, a pair of brothers who are executives at the firm were actively involved with the business and allowed for use of pooled resources. After most of those functions were gradually brought in-house to Bonnefield in subsequent years, he said, the firm began speaking about a year ago with several parties that included both strategic and financial investors about a buyout of Colonnade’s stake.
Its search for partners was not limited to Canadian institutions, said Eisenhauer, noting that Bonnefield was ultimately introduced to Walter GAM through a consultant to one of its LPs. He added that part of what made the newly established unit of the Canadian financial conglomerate a good fit was its offer to continue growing Bonnefield’s strategy – which focuses on sale/leasebacks with Canadian farmers – independently.
Walter GAM is a private equity platform launched in 2018 as a unit of the Walter Group, a Quebec-headquartered investment firm active in public and private markets.
“It’s not that they are going to be out knocking on doors for us, but they certainly bring a network of affiliates and a depth of connections which can only help us when we want to grow, in our existing products or potentially through new products as well,” said Eisnehauer.
ESG has always played an important role in Bonnefield’s fundraising process, said Eisenhauer, though terminology has changed over the years. Throughout, he added, there has been a gradual increase in expectations of both new and existing investors regarding environmental stewardship and consistency of disclosures.
“Maybe not so much American yet, but certainly with Canadian institutions and European institutions, it’s the first thing you get asked,” said Eisenhauer of ESG. “It used to be at the end of the checklist and now it’s the first and most detailed thing you get asked.”
Interest in Canadian farmland has been supported of late, he added, by a surge in exports to China that has helped boost sentiment. Farm Credit Canada’s annual farmland report noted that despite a slowdown in sales due to covid-19 in the months before May, the second half of 2020 saw considerable activity supported by low interest rates and rising commodity prices.
“We have the tailwinds, temporary though I am sure they will be, looking at the beginning of 2021,” Eisenhauer said. “This looks like it’s going to be a hell of a year for the ag sector in North America and Canada.”