Bonnefield to deploy C$137m open-ended fund in Q1

Chief executive Tom Eisenhauer says a strong pipeline leaves his firm confident it can deploy capital quickly across Canada’s farmland markets.

Bonnefield Financial‘s chief executive said it expects to deploy most of the C$137 million ($103.8 million; €93.7 million) it raised at first close for its open-ended fund during Q1 2020.

Tom Eisenhauer, president and CEO of the Toronto-headquartered farmland manager, told Agri Investor: “We expect this first C$137 million is going to get committed pretty quickly.

“Our investment team thinks it’s going to be pretty much committed in the first bit of Q1, [because] we’ve seen such strong demand from Canadian farmers.”

Eisenhauer added that the Bonnefield Canadian Farmland Fund V contained one anchor investment by a “large” Canadian pension, which he declined to name, alongside commitments from four smaller Canadian institutions.

He told Agri Investor in June that the firm was launching the open-ended vehicle to meet growing demand for exposure to farmland, which had come from endowments and smaller pension plans in Canada. Through a strategy focused largely on offering sale/leasebacks to Canadian farmers across a diversified range of the country’s regions, the fund targets internal rates of return, net of fees, of between 9 and 11 percent.

“For many of the smaller plans, they are really being pinched by the low-rate environment,” Eisenhauer said. “People are coming to realize that this low-rate environment that we are in is likely to persist. They [smaller pension plans] have fewer ways to access these various asset classes so there is a pretty strong interest in finding ways, and therefore open-ended structures can make it a bit easier for them.”

Rather than any defined entry or exit period, Eisenhauer said the fund would open to LPs periodically, according to interest from existing and potential new investors and activity levels in farmland markets.

“It’s really going to be, in our case, supply- and demand-driven, rather than [according to] any regular schedule,” he said.

Over the past 12-18 months, said Eisenhauer, Bonnefield’s drive for diversity has come to include a stronger focus on permanent crops, including blueberries in British Columbia and apple orchards in south-western Ontario.

Recent conversations with producers in northern British Columbia, he said, has also revealed significant interest in expanding pea production in the region.

“It’s all relating to this plant protein thing, which is going to be a fundamental driver of agriculture everywhere, but Canada as well, over the next decade or so,” said Eisenhauer. “It’s a big deal, I think.”