Family office abandons fund for LatAm co-investment platform – exclusive

Sherpa Asset Management's agri investment arm will soon close on around $40m of commitments across two projects in Colombia and Peru.

The agriculture investment management arm of Swiss family office Sherpa Asset Management will soon close on around $40 million worth of Latin American agri investment projects after changing strategy last year to offer investors direct, co-investment opportunities instead of a closed-ended fund.

SIP Agriculture, the investment platform and manager, has attracted commitments from family offices and high net worth individuals for a Peruvian sugar substitute business and a Colombian cattle and rice farming project.

Last year, Sherpa received soft commitments for $35 million towards a $300 million fund, SIP LatAm Agrifund, but conversations with investors soon revealed that they wanted to invest more directly and choose specific projects and time frames to invest in, according to Christian Frey, chief executive of Sherpa Asset Management.

“We decided to leave the fund structure because we realised that investors were much more interested in a co-investment structure,” he told Agri Investor. “Our concept is still the same – offering access to a platform of diversified agriculture projects across Latin America – but we realised that the investors we were speaking to all had different desires in terms of countries, crops and time scales, so we had to offer them another way to invest with us.”

SIP has now raised $20 million for a Peruvian stevia production and processing project. Stevia is a sugar substitute. SIP will purchase a stake in the existing business alongside existing shareholders, the majority of which is and will remain the operator of the land, according to Frey.

SIP is also aiming to raise between $20 million and $25 million for a Colombian cattle and rice farming project before the end of the year. This project – which will be 25 percent owned by the existing owner-operator and 75 percent owned by Sherpa and its investors – highlights a more typical investment model that SIP wants to pursue with other projects, according to Frey.

“The stevia project is our first to close but this is not really a standard model; it’s more of a special situation because there is a focus on building up the production facilities instead of the farmland,” he said. “Our main strategy is in primary production, although we would of course consider some simple processing assets on a case-by-case basis.”

Sherpa, the family office, will invest 10 percent into each deal and the project will focus on primary production, most often partnering with a local operator and injecting expansion and improvement capital into the business. SIP has hired employees to be based locally and work alongside the local partner in each project as a controller and support to the operations.

“We have our own people working exclusively for us who are agriculture experts; usually agronomists,” said Frey. “They do not manage the farm, but they monitor and control the management of it. They help with budget control, agronomy, make sure the farmer gets the best productivity out of the land. They are based in different regions, potentially working across several projects.”

Other projects SIP is raising capital for include a larger Brazilian soya and cattle farm and greenfield projects in Paraguay. The firm’s 20-deal pipeline also extends into Bolivia.

SIP’s investor base is mainly made up of family offices and high net worth individuals although it is developing institutional clients for some of the larger transactions, according to Frey.