Brookfield nears first close of Brazil AgriLand Fund II – exclusive

Brookfield Asset Management, the global alternative assets manager, is set to announce the first close of its second Brazilian agriculture fund on $300 million later this month, a source close to the situation told Agri Investor.

Brookfield Brazil Agriculture Fund II is targeting $500 million with a cap of $700 million, and a second closing on $500 million is expected in the summer, according to the source. AgriLand Fund II, as it’s also known, will focus on investments in row crop land in Brazil and has a 10-year life.

Fund I raised $330 million in 2011 and also focused exclusively on agricultural land.

The fund counts the New Mexico State Investment Council (NMSIC) among its investor base after the council committed $75 million at a council meeting in April.

Some investors have asked Brookfield to slow down the fundraising process to give them enough time to do due diligence. “You have the summer coming where people take time off for vacations, so the process will have to slow down a little bit,” said the source.

Speaking to Agri Investor in an earlier interview, Renato Cavalini, senior vice president of Brookfield Brazil, pointed to a wealth of deals in the sector.

“We already had a very good pipeline; we know where the best farms are and where to find good deals,” he said. “I’m not in a hurry and the next couple of years will be very interesting for us.”

Cavalini also expects farmland supply to increase in the wake of falling commodity prices and the increased cost of operation – such as purchasing fertilisers and seed – which has increased by around 10 percent.

“With margins shrinking and interest rates increasing in Brazil, some land owners will have to sell at least part of their lands, so it will be great for us,” he said adding that there would be opportunity to buy farms quickly and at a discount.

With an over 100-year history, Brookfield has over $200 billion in assets under management with a focus on property, renewable energy, infrastructure and private equity. Its main clients base is institutional investors including US pension funds which Cavalini described as “great investors”.

“Nowadays they have a much better understanding of the business,” he said. “You have traditional pension funds that have invested in agri for a long time and endowments also. I think [farmland] is becoming more of an established asset class rather than just something alternative. The agri sector is becoming more familiar to them.”