CBRE brings UK insurer to Aussie farmland fund – exclusive

Australian sheep meat and cereals investment manager Growth Farms has held a first close of its first fund on A$35 million.

Growth Farms, an Australian agriculture asset management firm, has held the first close of its Australia Fund I on A$35 million ($27 million; €25 million) after a commitment from a UK insurance company, according to David Sackett, managing director of the company.

The investor was represented by CBRE Global Investors, the global real estate investment specialist. CBRE now offers discretionary investment management for institutional investors in agri through its CBRE Global Investment Partners programme.

The 10-year private equity fund is targeting A$150 million overall and Growth Farms hopes to close it by the end of the year. Growth Farms focuses on sheep meat, cereals and oil seed production. Lamb prices have increased 7 percent a year since 2000 and wheat is up 4 percent in the same period.

The fund, like the firm’s A$400 million in separate accounts, will focus on deals within a A$7 million to A$12 million range which Sackett calls the “sweet spot”, providing access to more opportunities but without the dis-economies of scale that can occur if investments get too big. Deals higher than A$20 million risk giving benefits to the asset manager but not to the assets and ultimately the investor, he argues.

Alexandra Crossing, director at CBRE Global Investment Partners, based in Singapore, said that Growth Farms aligned with the firm’s preferred farmland strategies.

“We liked the mixed farming strategy focusing on wheat and sheep meat,” she told Agri Investor. “It plays to Australia’s comparative advantages as well as the greater macro themes of rising demand from developing economies. During our extensive due diligence we were impressed that Growth Farms could demonstrate their ability to lift productivity and net operating income over the last eight years.”

The fund will use leverage for up to 20 percent of the fund size; 10 percent for working capital and another 10 percent in drought contingency.

The fund has an investment period of two years and while it won’t buy properties for conversion into other uses, it will buy rundown farms where it can lift productivity by up to 30 percent, especially in livestock, said Sackett.

Until now, Growth Farms‘ investor base has been predominantly family office capital but it is targeting a more institutional client base for the fund.

CBRE’s GIP programme “offers tailored indirect investment strategy and execution into the real estate market through unlisted property funds throughout North America, Europe, and Asia” and “manages portfolios on behalf of separate account clients as well as pooled funds of funds”, according to the website.

CBRE Global Investors has $90.6 billion in assets under management and recently announced the expansion of its separate accounts business by appointing James Clifton-Brown as chairman and Pieter Roozenboom to serve as executive director of the newly-created Global Separate Accounts Executive Board. The firm has $37 billion in separate accounts.