First look
Morrison & Co’s carbon play
Another week, another infrastructure fund manager investing in natural assets.
After Ardian launched Averrhoa Nature-Based Solutions last week, news reached us that Morrison & Co is also investing in natural assets – albeit via one of its existing vehicles, the closed-end Growth Infrastructure Fund, rather than setting up a new platform.
We spoke to Morrison & Co’s head of asset management Steven Fitzgerald, who said: “We start every investment decision by asking two questions: is this an idea that matters and is it infrastructure? Being consistent with our broader decarbonization theme, which includes our global renewables portfolio, it is a clear ‘yes’ for being an idea that matters. But the concept of buying farms within an infrastructure mandate generated some interesting debate.”
What has it most excited, though, is the potential for the farms it has purchased to sequester carbon. Fitzgerald said Morrison & Co is confident the assets, all in Queensland to date, will produce a reliable stream of Australian Carbon Credit Units, demand for which he expects to only increase over time.
As for more traditional farming? Fitzgerald was clear that Morrison & Co “has no intention of owning any animals,” or even managing livestock herds directly, instead leasing the assets to carefully selected partners.
A slightly different play on natural assets than Ardian, then – but carbon remains central to the business case.
Read the full article here.
They said it
“We’ve had around 20 percent per year increases in land values over the last three years but farm profitability hasn’t kept up with that. That means farmers can’t afford to pay 4.5 percent rent”
Growth Farms senior portfolio manager David Sackett tells Agri Investor why the firm is winding up its Agricultural Lease Fund four years early and banking its gains
Fundraising
Blue Earth closes $108.5m impact credit fund
Blue Earth Capital, the impact firm established by the founders of Partners Group, has closed its second impact credit fund on $108.5 million.
The fund focuses on social and environmental themes in emerging markets, such as financial inclusion, affordable housing, agribusiness, energy access, healthcare and education.
It was launched in 2020 with a $20 million commitment from Urs Wietlisbach, a co-founder of Partners Group and chairperson of the firm. Blue Earth did not start marketing the fund externally until 2021, head of private credit Amy Wang told affiliate title New Private Markets.
Other investors include the US’s Development Finance Corporation, which committed $25 million, and several pension funds, family offices and foundations.
BlueEarth Credit Strategies II closed above target, having aimed to raise $100 million. Wang considers this a testament to LPs’ sustained appetite for private credit amid tighter fundraising conditions across private markets.
“For some of the biggest [social and environmental] challenges in emerging markets, private impact credit is an asset class that just works really well. It’s very resilient, it’s uncorrelated to the broader market,” said Wang.
Read the full story here.
LP watch
Nest seeks timberland GP
British public pension scheme Nest has formally started searching for a fund manager through which it can make investments in timberland.
The defined contribution pension scheme started its natural capital market warming exercise in February.
Nest investment policy analyst Jess Menelon, who led the market warming exercise, said at the time that an allocation had not yet been set for the asset class, but that the pension has set a 5 percent allocation for its other private market assets, having only invested in public equities until 2019.
“For us to make it worthwhile, I’m not sure we’ll look at anything that’s less than 2 percent allocation,” Menelon told Agri Investor.
“Any asset class we’re going into or any fund manager that we would hire, we need a fund that is evergreen, open-ended and that is scalable with our gross. We also don’t pay performance fees. Being honest with that and upfront does filter initial managers out and leaves others to get a bit more creative,” she added.
Commenting on the procurement launch, Nest head of private markets Stephen O’Neill said: “We’ve been exploring ways to include natural capital investments into our portfolio as we continue to diversify our private markets allocation, take advantage of complex and scarce investment opportunities, and to decarbonise as we move closer to net-zero targets. Timberland ticks all of these boxes.”
Farmland
ANREV: Index records lowest return since inception for Q2 2023
Investment returns from Australian farmland fell to their lowest level in more than eight years in June 2023, according to the latest edition of the Australia Farmland Index for Q2 2023.
Australian farmland returned 2.01 percent on a 12-month annualized basis, comprising an income return of -1.22 percent and capital growth of 3.21 percent.
This is the lowest 12-month annualized rolling return figure for any quarter since the inception of the Australian Farmland Index in 2015, which is compiled by the Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV).
The return is also down on the same annualized figure for 12 months earlier, which stood at 10.21 percent for the year to the end of Q2 2022, and is a steep drop from the Q1 2023 annualized return of 12.31 percent.
The figure has fallen sharply due to several quarters of low or negative quarterly returns that have now filtered through to affect the 12-month rolling annualized return.
Read the full story here.
Lawsuit
Flagship Pioneering’s Inari Agriculture served lawsuit
Listed agricultural inputs and seeds business Corteva filed a lawsuit against Inari Agriculture, a portfolio company of PE firm Flagship Pioneering.
The lawsuit “seeks to prevent Inari from continuing its brazen efforts to steal Corteva’s groundbreaking work,” said a statement from Corteva.
The statement added: “Specifically, the lawsuit alleges that Inari deliberately used a third-party agent to obtain protected Corteva seeds, illegally exported the seeds out of the United States, made slight genetic modifications of the biotech traits and is seeking U.S. patents for those modified traits.”
Inari Agriculture and Flagship Pioneering did not respond to messages requesting comment.
The suit was filed in the US District Court for the District of Delaware.
Read Corteva’s statement here.
Sustainability
Leading Harvest expands north
Manulife Investment Management, Bonnefield and McCain Foods are collaborating with Farm Credit Canada on an effort to extend the non-profit sustainability standard Leading Harvest into Canada.
Leading Harvest president and chief executive Kenny Fahey told Agri Investor the group has not yet committed to using the sustainability standard and will follow the example of a previous expansion into Australia by taking steps to ensure the program can be appropriately applied in a Canadian context.
“The things we ended up having to change when we went to Australia was more about references, to make sure the standard was readable both by the user of the program and auditor of the program, in that context,” he said.
“That’s where we expect to see similar changes when it comes to Canada, not related to anything around materiality or technical aspects of the standard.”
Fahey said Leading Harvest has partnered with Canadian consulting firm SmartCert to certify compliance with potential participants in Canada, assuming the role played by Averum in the US and ACO in Australia.
The importance of third-party verification was among the key themes of discussion among more than 100 farmers, investors and service providers convened by Leading Harvest at its Global Summit on Regenerative Agriculture, held in June.
“Self-reporting is not enough. Attendees agreed that the sector needs unbiased, independent third parties to validate, fact-check claims and to keep all parties accountable,” said Leading Harvest’s summary of the event.
VC fundraising
Umiami, a French plant-based start-up, has completed a €32.5 million funding round led by Sociétés de Projets Industriels (SPI) fund and French Tech Seed, with participation from Astanor Ventures, Redalpine, Newfund and VERSO Capital.
Eden Brew, an Australian precision fermentation start-up co-owned by Norco, closed a $24.4 million Series A funding round led by Main Sequence Ventures, with participation from Breakthrough Victoria, Radar Ventures, Possible Ventures, Mars’ Digitalis Ventures, NGS Super and Orkla.
Pow.bio, a US-based precision fermentation start-up, raised a $9.5 million Series A round led by Re:Food and Thia Ventures, with participation from Hitachi Ventures, Bee Partners, Possible Ventures, X factor, iSelect, Climate Capital, Vectors, Better Ventures and Cantos.
Bonsai Robotics, a California-based robotics and automation start-up, raised a $13.5 million seed funding round led by Acre Venture Partners, with participation from E14, Congruent, Serra Ventures, Fall Line Capital, SNR Ventures, Andros and numerous angel investors.
Rantizo, an Iowa-based operator of spray drone services for agriculture, raised $6 million in a Series A funding round led by Leaps by Bayer, with participation from Fulcrum Global Capital and Innova Memphis.
Also in the news…
Bamboo Capital appoints David Grimaud as CEO
Grimaud brings a wealth of impact investing experience with him, having most recently been chief executive of impact investor Symbiotics Asset Management (Agri Investor).
A ‘mountain of supply’ – counting numbers in Australia’s livestock market
Sheep, cattle and goat markets in Australia experienced high levels of production as large volumes of meat continue to congest global supply chains (Rabobank).
Vietnam’s first voluntary carbon exchange launched
CT Group launched its ASEAN Carbon Credit Exchange Joint Stock Company on September 29 (Vietnam+).
LPs are piling into VC secondaries
A new survey from Goldman Sachs Asset Management found that 48 percent of LPs plan to increase their allocations to secondaries (VCJ).
New natural capital strategies are a welcome development
Adding Ardian and Just Climate to the mix of managers investing in nature-based solutions helps break down barriers (NPM).
Sumitomo Forestry to buy US apartment builder JPI for $215m
Sumitomo Forestry America will buy 90 percent of JPI’s shares in November, with the purchase price to be determined through an earn-out structure (Nikkei Asia).
Carlyle’s Accolade mulls restructuring plan, debt-for-equity swap
Existing lenders for The Carlyle Group-owned wine producer have been presented with a turnaround plan (AFR).
Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp
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