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Craigmore permanent crop fund nears NZ$300m hard-cap – exclusive

The firm took more than NZ$150m in commitments in 2021 across its permanent crop, forestry, dairy and farming vehicles.

New Zealand fund manager Craigmore Sustainables is on course to hit a new NZ$300 million ($203 million; €179 million) hard-cap on its permanent crop vehicle.

Chairman Nick Tapp told Agri Investor the 2016-vintage Craigmore Permanent Crop Partnership “only has about NZ$20 million left” before it hits the fundraising ceiling.

The vehicle is invested across kiwifruit, apple orchards, wine grapes and is finalizing an additional apple orchard acquisition, about which Tapp declined to disclose any details. The permanent crop fund will continue to deploy capital beyond the latest investment, the chairman confirmed.

“Permanent crops have become a very sexy sector. Everybody seems to like them,” said Tapp. “Export revenues from New Zealand horticulture – which is nearly all permanent crops – have grown by 7 percent per annum for 20 years. And it’s still going, it hasn’t slowed.

“The industry in New Zealand is very commercial, so land tends to migrate towards its highest and best use over time, and that is often horticulture. The kiwifruit industry has gone from strength to strength and the wine industry can’t supply enough wine, basically. Demand from North America, particularly, but also demand from Europe, is just not being satisfied. New Zealand can’t grow enough.”

Craigmore’s 2021-vintage Totara Forestry Partnership – which has a NZ$300 million target – had a first close last summer, Tapp confirmed, and has raised more than NZ$30 million. The vehicle also completed its first forestry asset purchase in 2021, for which details have not been disclosed.

The firm raised more than NZ$150 million across all its funds in 2021, said Tapp, which includes separate farming and dairy vehicles.

Craigmore planted more than 1,000ha of new forestry on tier-two grazing land that has been converted for commercial forestry, and will generate carbon credits that can be traded on New Zealand’s emissions trading scheme.

The price of carbon on the state-backed ETS has risen from roughly NZ$25 three years ago to NZ$70 today, added Tapp, which puts investors that are ready to invest in natural capital at an advantage over those who are not ready to make commitments.

“People are not going to turn around in a year’s time and say, ‘All that climate change stuff was rubbish, we don’t need to it do anymore.’ The demand is going to continue to grow,” he said.

“Many emitters are buying and warehousing credits because they know the price is going to go up, so they’d rather pay NZ$70 today than pay NZ$100 tomorrow.”