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Duxton attracts private capital to hybrid agri fund – exclusive

The Asia-based asset management firm has raised two agri funds for private capital to co-invest alongside institutional clients.

Duxton Asset Management is still fundraising for the open-ended Duxton Global Agricultural Fund (DGAF), a hybrid of listed agriculture stocks and illiquid agricultural assets.

The fund is attracting demand mainly from private investors, like the closed-ended Duxton Agricultural Land Fund (DALF), which closed on $20 million in June. There is no set target for DGAF and the current fund size has not been disclosed.

DGAF invests 30 percent into stocks and 70 percent into illiquid agricultural assets, which could include the firm’s other funds such as DALF or co-investments with Duxton’s discretionary account clients – institutional clients including APG, the Dutch pension provider.

DALF will also co-invest with Duxton’s discretionary account clients into a range of emerging and developed markets; Duxton currently has 15 land-rich investments across the Caribbean, South America, Australasia, Southeast Asia and East Africa.

It has a further three private equity investments in agribusinesses further up the value chain, an opportunity Duxton wants to explore further, according to chief investment officer Desmond Sheehy.

DALF is a 10-year fund, whereas DGAF is open-ended and intended for investors that want liquidity.

Duxton currently manages around $700 billion across four discretionary mandates, Deutsche Bank’s DWS Global Agricultural Land & Opportunities Fund, DALF and DGAF.

The firm was spun out of Deutsche Asset Management by Ed Peter, the chairman, and Sheehy six years ago. Deutsche maintained a stake until Duxton bought it out three years ago.

Duxton has a two-pronged investment strategy: it either invests management buyouts, acquiring 90 percent to 100 percent of an operating company, or it enters into co-operative investments where it provides growth capital to an existing management team. In either case, the land involved will already have been identified, although Duxton’s role on the board of the MBO or joint venture enables it to reject some land purchases.

Investments are usually around $10 million to $20 million in size and last around seven years. The primary exit aim is a trade sale, according to Sheehy.

Duxton uses a range of external and local consultants and contacts to advise on each investment, and has 13 investment professionals that visit investments regularly. This might include two to three month stints working alongside each partner.