Federation Asset Management, a Sydney-headquartered fund manager focused on infrastructure and private equity, could invest in agriculture assets through its new infrastructure vehicle, the firm’s co-founder has said.
Stephen Panizza, Federation co-founder and head of renewable energy, told Agri Investor that fundraising for the firm’s latest vehicle, the Sustainable Australia Real Assets Fund, is set to kick off in H2 2020.
The fund will initially invest in Australian renewable assets, predominantly wind, but will have a broader mandate to invest in sustainable infrastructure across the Asia-Pacific region once the fund reaches scale, Panizza said.
SARA will target a first close of A$500 million ($344 million; €310 million) with an upper fundraising limit of A$1 billion. “I think we can deploy $500-750 million in a sensible period of time in major assets in Australia,” Panizza said.
As well as renewable energy and energy-from-waste assets, SARA could invest in water infrastructure such as desalination plants and vertical farming or greenhouse assets, Panizza said.
“I think more sustainable or closed-system farming is going to have a place in Australia,” he said, highlighting early steps taken by firms such as KKR with its Sundrop Farms facility in South Australia. KKR sold that business to infrastructure fund manager Morrison & Co in 2019 for an undisclosed sum.
“I think [the KKR investment] was a little bit ambitious – I’m more interested in some of the greenhouse farming techniques where you use, effectively, the benefits of solar energy, and possibly more sophisticated solar than PV [photovoltaic] so you get heat as well, and specialized spectrum lighting for growing vegetable crops. Those types of asset classes, as the industry matures, will too become infrastructure-style assets [and] are things that I think could fit into SARA,” Panizza said.
Federation Asset Management was founded in 2018 as a private equity fund that would invest in renewable energy, social and health real estate, and operating companies that serve a social need.
It is currently in the process of negotiating a takeover bid through the acquisition of shares in Australian Securities Exchange-listed Windlab that it does not already own, in a deal worth approximately A$56 million. The firm intends to use capital raised for SARA later in 2020 to help fund Windlab’s development pipeline of wind projects.
Panizza was previously an executive director at Macquarie Group and chief investment risk officer at the Clean Energy Finance Corporation. Federation’s chief executive Cameron Brownjohn previously led Macquarie Capital’s principal investment division for Australia and New Zealand.