First look
Nuveen looks to tap qualified wealth for farmland strategy
A farmland strategy managed by Nuveen Natural Capital is the focus of an expansion of its partnership with iCapital, a platform offering alternative investments to the wealth management and financial advisory industries.
Nuveen already has real estate, private equity and private credit offerings available through iCapital. The Nuveen Global Farmland strategy to be made available is described as already including California properties devoted to winegrapes, soybeans, almonds and others.
In a late July announcement, Nuveen global head of alternative investment product Keith Jones predicted farmland’s risk-adjusted returns, low correlation and inflation protection would elicit “significant interest” from the qualified wealth investor segment.
“Our managers focus on identifying diverse farmland sectors that are best positioned to benefit from a broad range of macro dynamics and local attributes, including market governance factors in specific countries and regions, as well as supply and demand factors like changing diets and consumer preferences,” Jones said.
Read the full story here.
They said it
“From an ideological point of view, governments should facilitate and not intervene, and for sure not disrupt or crowd out what private investors can do”
An Agri Investor source active in global agribusiness markets questions whether the Biden administration’s plans for a $1 billion vehicle supporting developing-world water, farming and agroforestry projects is the most effective way it can help fight climate change
Fund watch
Proterra brings in $500m for second credit fund
Cargill spin-out Proterra secured re-ups from every LP in the $200 million first iteration of its credit strategy, which seeks net IRRs of 13 percent through provision of five-year loans of between $10 million and $50 million, with interest rates of 10-12 percent.
Proterra’s partnership with the Farm Credit System continues for the second fund, and it plans for up to 80 percent of loans from the first vehicle to be extended alongside the 15 FCS entities with which the firm has active relationships. Managing partner Rich Gammill told Agri Investor that banks’ challenges elsewhere in their balance sheets have caused a retreat from cashflow lending that creates opportunities.
Read the full story here.
Water
Murray-Darling Basin Plan timeline slips
The Murray-Darling Basin Plan, the flagship water market framework developed by the Australian federal government and its state counterparts, will not be completed on time, federal water minister Tanya Plibersek said last week.
At issue are the water recovery targets set out in the plan, which call for 3,200GL of water to be recovered for the environment by a legislated deadline of June 2024. New advice from the Murray-Darling Basin Authority told the government that it would fall short of the target by 750GL – little surprise to anyone involved in Australian water markets.
Multiple sources have told Agri Investor that the government would struggle to meet its pledge to implement the plan in full by June 2024 – or at least not without incurring significant excess cost via controversial water buybacks.
Details are still to be finalised, but the government will now seek to extend the deadline for the plan’s implementation.
Sustainability
Paine Schwartz to add LP sustainability council
A council of LPs interested in an active role in sustainability will be among the projects undertaken by Rachel Hurley in her new role as head of sustainability at Paine Schwartz Partners.
Natalya Michaels, a Paine Schwartz managing director and head of investor relations, told Agri Investor soon after the firm hired the former Blackstone and Apollo executive in mid-July that Hurley’s position is a new one within the firm’s Portfolio Excellence Platform.
“Over time, the importance of sustainability has increased for both us and our LPs,” said Michaels. “Our goal is to progress our thinking on sustainability-related matters, making sure we are cutting-edge and continuing in the evolution of how to refine our sustainability strategy. We felt that at this point a dedicated person will be helpful.”
In addition to working on internal and external reporting, Hurley’s role will involve working with portfolio companies to set and achieve meaningful sustainability goals. In looking to fill the position, Michaels said, Paine Schwartz began with a very broad focus that included candidates with experience elsewhere in ag or sustainability, but eventually came to focus on those with experience at a financial firm.
“[We needed someone] coming from a financial organization that has portfolio companies; someone that has worked on on-boarding portfolio companies and working with management teams in their efforts to either look at risk management or value creation through sustainability. Also, someone who has worked on reports and worked with LPs, because we have growing interest and level importance from our LPs of being able to engage.”
Mandates
CEFC receives new investment mandate
The Clean Energy Finance Corporation, the Australian government-backed investor that has deployed significant amounts of capital into a range of farmland funds and agtech companies in recent years, has received a new investment mandate.
The incumbent Labor government has tweaked the mandate to undo changes introduced under the previous coalition government, which, among other things, sees the benchmark rate of return for its general portfolio reduced to 2-3 percent above the five-year Australian government bond rate per year. It previously sat at 3-4 percent above the same five-year Australian government bond rate per year.
The changes mean the return hurdles are a bit less onerous, potentially incentivizing investments that may carry a little more risk than had previously been possible.
Farmland
US farmland markets return >1 percent in Q2 growth: NCREIF
The National Committee of Real Estate Investment Fiduciaries reported that US farmland markets produced a total return of 0.8 percent for Q2 2003. Income accounted for 0.53 percent of total growth reported by the eight institutions reporting data to NCREIF.
According to its most recent reading of an index that contains 1,331 total properties, the 988 total US row crop properties produced 1.72 percent total growth that was balanced in the total reading by -0.62 percent growth reported by 333 permanent crop properties.
Over the trailing year, row crops have produced a total return of 12.91 percent, according to NCREIF, which reported 1.13 percent growth over the same period for permanent crop properties.
University of Illinois professor Bruce Sherrick and UBS Farmland Investors’ Dan Murray will lead a discussion of the Q2 report on an August 9 webinar.
VC fundraising
Brevel, a Tel Aviv-headquartered start-up developing microalgae as an alternative protein, raised an $18.5 million seed round led by ag-focused venture capital firm NevaTeam Partners and European Innovation Council-backed The EIC Fund.
FarmWorks, a start-up headquartered in Nairobi, Kenya, raised $4.1 million in a pre-Series A round led by Acumen Resilience Agriculture Fund that will support plans for a supply chain network that connects smallholder farmers with markets and services.
Also in the news…
Equilibrium DIPs with AppHarvest into Chapter 11 Equilibrium Capital provided $30 million in debtor-in-possession financing to Kentucky-headquartered controlled environment ag producer AppHarvest, which filed for Chapter 11 protection with plans to restructure. (Just Food)
Flannery farmland spree feeds feds’ oversight drive Acquisition of 52,000 acres that include dryland farmland parcels near California military facilities by Flannery Associates, a Delaware registered LLC, is drawing attention to efforts aimed at strengthening disclosure regulation for foreign investment in US farmland. (The New York Post)
Universities flag forced labor risks in US food processing A pair of US and UK universities has published a journal article highlighting the risks of exploitive practices is US supply chains for animal-based proteins, fruits and vegetables, sweeteners and coffee. (The Hill)
AXA looks to tap Amazon for carbon credits AXA IM Alts committed $49 million to reforestation projects in Brazil to be managed for production of up to 6 million carbon credits by Sao Paulo-headquartered project management start-up Mombak, in which AXA owns a minority stake. (New Private Markets)
Today’s letter was prepared by Chris Janiec and Daniel Kemp.
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