Canadian investment management veteran Michael Kyne is launching a food and agriculture-focused listed securities fund in February 2015.
Albrecht Kyne Capital Partners, the fund management company, has been managing a $20 million separate account pursuing the same strategy for two high net worth individuals since May; that account is up 21 percent since it launched, according to Michael Kyne, chief executive of The Harvest Fund.
The Harvest Fund, which launches on February 1, will target high net worth individuals and family offices and is targeting an initial $10 million fundraise. The fund will likely be capped at $100 million.
“I don’t want a multitutde of employees dealing with clients, I want to be able to maintain contact with them myself as much as possible,” Kyne told Agri Investor.
The fund will invest in “anything to do with the food industry”, from growing and producing to logistics and transportation to food technology and “anything involving alcohol”, said Kyne.
The fund’s main thesis is that there is growing demand for high value food and drink due to an expanding middle class globally.
“So many food companies that I have spoken to tell me about a bottleneck in the ability to supply the growing demand for food,” he said. “I think we are really entered into a cycle where we are going to see a food price re-set to a much higher level than in the past.”
The impact of falling oil prices in the US and the extra cash it puts into ordinary people’s pockets is another boost to the thesis, argued Kyne.
“An extra $700 a month or so usually ends up being spent instead of saved and research suggests that two-thirds will go on food and alcohol,” he said. “Going into 2015 we are going to see a huge increase in the consumer contribution to the US economy.”
The falling price of oil also means that food and drink production companies have lower costs which is a positive for revenues.
The food and agri sector has also been producing a wave of new entrants and entrepreneurs creating lots of investment opportunities for the Fund, added Kyne.
The minimum contribution to the fund is $100,000 and it charges a 2 percent management fee and 20 percent performance fee.
Investment examples from the past year as a separate account include avocado producer Calavo Growers, White Wave Foods, a plant-based food company, and Cal-Maine Foods, a fresh egg producer and distributor.