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‘We’ve had to be flexible, because if you are not flexible, you die’

With C$400m deployed from Fiera Comox's debut vehicle, partner Bob Saul explains why the firm has shifted focus from a search for assets with existing cashflow to earlier-stage opportunities.

Fiera Comox, an ag-focused subsidiary of Fiera Capital Corporation, has raised and deployed C$400 million ($297.8 million; €265.6 million) since launching its debut open-ended vehicle in mid-2017, according to a partner at the Montreal-headquartered firm.

The unit was established in 2016 through a joint venture between Montreal-headquartered asset manager Fiera Capital and Comox Equity Partners, a firm founded by a group of former executives at Canada’s C$158.9 billion Public Sector Pension Investment Board that included managing director Antoine Bisson-McLernon.

Its open-ended Global Agriculture Fund was launched in June 2017 and by August had raised C$200 million from a combination of institutions, family offices and high-net-worth individuals, Fiera Capital president and chief executive Jean-Guy Desjardins told investors on an earnings call. At the time, Desjardins said he expected the vehicle would secure an additional C$300 million by the end of 2017.

Partner Bob Saul, who joined Fiera Comox in 2017 after earlier stints with GMO and Barings, told Agri Investor earlier this month that in the time since, the firm has adapted its investment strategy to better match the character of opportunities available in the US, Australia and New Zealand markets that are its focus.

Originally, Saul said, Fiera Comox intended to seek out agricultural operators with existing assets who were willing to contribute those assets to new joint ventures.

“We do have those kind of deals inside of our portfolio, but we also have some flexible deals where we have essentially motivated the operator to stay in the deal for a long period of time for a bake-in and a certain piece of equity,” said Saul. “We’ve had to be flexible, because if you are not flexible, you die.”

Though asset owners are often individuals with little day-to-day involvement with management, Saul said, there are companies where operational teams managing the assets have been doing so for decades, but do not necessarily have land or capital to bring to a transaction.

The firm has identified an operational team it would like to work within California’s almond industry, Saul said. In addition, Fiera Comox has also drawn from the open-ended vehicle to finance its acquisition of Sweet Tree Holdings, a Vermont company that produces maple syrup under the Maple Guild brand, from MassMutual last year.

Saul declined to disclose details of the Sweet Tree Holdings transaction. He reportedly managed Sweet Tree Holdings while serving as a managing director at Wood Creek Capital Management, which previously operated as a real-assets focused subsidiary of MassMutual.

Under its more flexible investment strategy, Fiera Comox has been open to deals as small as $15 million and willing to commit to subsequent expansions of as much as $50 million or $75 million, Saul said.

The firm currently has two or three additional deals in its pipeline that, according to Saul, may encourage Fiera Capital to bring an additional C$200 million into the Fiera Comox vehicle over about the next six months. Fiera Capital currently has more than C$136 billion in assets under management.

 

In part because of the success the nation’s pensions have had in such investments over the past decade, Canadian investors generally exhibit an elevated interest in real assets, Saul said.

In building an agriculture business responding to that demand, he added that Fiera Capital has followed a model it used in infrastructure and real estate, where much of the third-party capital invested in Fiera Comox has been raised through the wider Fiera Capital network.

“We are not worried about capital raising; we’re worried about capital deployment,” Saul said. “It’s very different than the Hancock model, where you raise capital and you have it waiting on the sidelines. What we hear from our investors who are in both us and Hancock is that they have been waiting two or three years to get deployed.”

In addition to facilitating a rapid capital deployment, Saul said investors have responded well to the fact Fiera Comox’s open-ended structure allows them to review deals within the vehicle before finalizing their commitment.

“The money tends to come in almost exactly in parallel with deployment,” he said. “For example, if we had a $500 million deal, we would be able to bring capital to that deal if it met our hurdle rates. The fact is, larger deals don’t tend to meet our hurdle rates because larger deals are very well-bid and very expensive.”