Gunn Agri Partners hits A$100m first close on TFP vehicle – exclusive

The Sydney-headquartered fund manager has secured commitments from the Clean Energy Finance Corporation and the SDG Kempen Farmland Fund for its Transforming Farming Platform.

Gunn Agri Partners has reached a A$100 million first close for its Transforming Farming Platform, the fund manager’s second investment vehicle.

The firm has secured a commitment of A$50 million from the Australian government’s Clean Energy Finance Corporation as well as another A$50 million commitment from the open-ended SDG Kempen Farmland Fund. These were announced by the CEFC in October 2021 but Agri Investor can confirm that Gunn Agri Partners has also held a first close on the platform following confirmation of the two commitments.

The vehicle, formerly known as the Sustainable Cropland Transformation Strategy, launched in 2019. Gunn Agri Partners declined to comment on further fundraising targets or timelines, although managing partner Bradley Wheaton told Agri Investor in September 2020 that the firm was targeting A$250-350 million for the vehicle.

The firm began acquiring properties for the strategy in October 2021, purchasing its first asset for an undisclosed sum in New South Wales’s Northern Tablelands region, a 3,500 hectare mixed farm.

The strategy focuses on making capital investment in underperforming small-to-medium-sized farms across Australia’s east and west coasts to lift productivity and optimize land use by integrating row crops, grazing, carbon sequestration, biodiversity conservation and other natural capital assets at an institutional investment scale.

Gunn Agri Partners has said it will tie performance fees to the sustainability performance of its assets, including such potential elements as soil carbon levels and carbon emissions.

In a statement, Wheaton said: “As agricultural asset managers for institutions there is complete transparency in our financial performance – what is ground-breaking here is that we have embedded the same accountability in the delivery of soil carbon, carbon in vegetation, emission reduction, biodiversity and other sustainability measures.

“Our first aggregation is a prime example of our strategy, [as] we acquired a mixed farm that has huge transformation potential but has lacked scale. We are bolting on neighboring properties and realigning the land use to reflect its potential, developing biodiversity, soil carbon and biomass carbon projects.”

On the potential for carbon credits to provide returns for investors, Gunn Agri Partners said: “The carbon markets are evolving and with that we expect price volatility. The revenue from natural capital assets provides our investors potential upside, but our performance is not reliant upon alternative revenue streams such as carbon credits.”

On its commitment to the platform, the CEFC said it hoped its investment would prove “transformative” for the assets acquired. CEO Ian Learmonth said in October: “Smaller scale, mixed-use Australian farms can reap considerable benefits by using data-backed best practice farming techniques to increase profitability and productivity while cutting their carbon footprint. This is a win-win development for farmers, agriculture and emissions reduction.”

The other investor in the Transforming Farming Platform, Kempen Capital Management’s SDG Farmland Fund, is an open-ended vehicle that has reached €350 million in commitments since launching in April 2021, having received a €200 million seed commitment from Dutch pension Stichting Pensioenfonds PostNL.