Denmark’s land prices used to be astronomically high. As the financial crisis unraveled, however, they took a serious beating – and are only starting to recover.
Great relative value was part of the reason that prompted FarmCompany, an investment holding exclusively dedicated to the country, to launch in 2009. Under the guidance of Blue Harvest, its Swiss-based advisor, it has since sealed 18 transactions grouped in three clusters, covering 1,900 acres.
The company manages €20 million of primarily high-net-worth capital coming from the UK (70 percent), the Netherlands (20 percent) and Denmark (the balance). It is looking to buy further farms this year in its efforts to deploy the €4.5 million it raised in December, says Jens Ohnemus, chief executive, founder and owner of Blue Harvest.
He tells Agri Investor FarmCompany has already invested €2 million to €3 million of that fresh pot of equity and will think about raising more once it has deployed the rest.
The venture is an interesting case study of alternative investment models targeting agriculture. FarmCompany is not a fund; it is a company in which investors are shareholders. Yet it promises similar returns to what many would expected from a closed-end vehicle with a primarily buy-and-lease focus (8 to 10 percent IRRs, comprising a 4 to 5 percent yield).
That it was established in Denmark during the recession probably helps: land prices are still down 30 to 40 percent from their 2007 peak. Importantly, farmland investment has been liberalized since, making it easier for foreigners and companies to participate.
There are other arguments for looking at Denmark, if you can afford to work on a more modest scale than in Australia or America. Click on our presentation to find out more – or download a copy by clicking here.