British asset manager Foresight is biding its time before a debut entry into food and agriculture, partner Dan Wells told Agri Investor.
The infrastructure and private equity investment manager has been developing its natural capital strategy for the last three years.
“We first of all established the sustainable land and food group within the infrastructure and real assets team, and that’s to look at opportunities from regenerative agriculture, sustainable forestry to new forms of food production,” Wells told Agri Investor.
“And that’s simply because we recognize that the overall thematic of how we manage land globally, how we meet the challenge of feeding up to 10 billion people without trashing the planet, those are themes that are really as important as the whole challenge of how we decarbonize the power system.”
Foresight’s presence in the natural capital space to date has been through its £130 million ($174 million; €155 million) portfolio of timberland assets held in its inheritance tax solution, which is not open to institutional investors, although the firm does invest institutional capital into other areas such as renewable energy.
The assets from the inheritance tax solution have been used to seed an IPO for the firm’s new London Stock Exchange-listed Foresight Sustainable Forestry Company, which can accommodate a wider pool of investors including institutional LPs, and is set to become the first listed UK forestry investment trust.
The IPO was launched on October 28 and ordinary shares issued pursuant to the initial issue is expected to take place on November 24, 2021.
Some of the food and ag areas into which Foresight could invest include onshore recirculating aquaculture systems, greenhouses and vertical farming assets.
Wells said these types of food production systems, which are not dependant on good weather conditions for their yield, can use little to no pesticides and have the potential to be powered with renewable energy, “could become infrastructure assets in future.”
“Albeit right now they still have a relatively higher risk profile because it’s still a nascent area but they potentially have a very high contribution to make to the sustainability transition.”
As the company continues to build its natural capital strategy in the coming years, one of the areas it could look at includes the restoration of marine ecosystems, given the ocean’s environmental role as a carbon sink.
“This are probably further out in terms of becoming more viable but it’s all part of the overall suite of natural capital solutions,” said Wells.
Foresight joined the Natural Capital Investment Alliance in early November, which is a group of asset managers investing in a range of themes including sustainable forestry and regenerative agriculture, through to investments in businesses that are supporting the shift to a circular economy.
The Natural Capital Investment Alliance aims to mobilize $10 billion by the end of 2022.