‘Healthy market tone’ helps Tiverton add $135m to equity and debt funds

Managing partner David Chattleton says larger pools of capital are ‘slowing coming back to agriculture’ after a few years away.

Agriculture’s resilience following covid-19 is among factors helping to improve sentiment for equity and debt approaches to the sector, said a managing partner at Tiverton Advisors.

Securities and Exchange Commission filings across three of the firm’s funds suggest Raleigh, North Carolina-headquartered Tiverton has raised at least $134.6 million since late 2019, when filing showed two of the vehicles held about $60 million.

“The tone in the market, from a fundraising perspective, is pretty healthy right now,” David Chattleton told Agri Investor.  “The consultant community and larger pools of capital are slowly coming back to agriculture after taking a bit of a hiatus for a few years.”

A February 2020 filing showed Tiverton AgriFinance II held $130.4 million collected from nine limited partners. The debt vehicle had raised $33.3 million from four LPs as of September 2019. A parallel vehicle, Tiverton II CIP, holds $26 million from a single investor, according to a September filing.

Tiverton’s equity-focused Ag Legacy Holdings contained $37.5 million from seven LPs as of a September 2020 filing, which showed the addition of $11.5 million from three investors since September 2019.

Tiverton manages more than $1 billion through private pools of capital and distinct closed-end vehicles for equity and debt investments in row and permanent crops, dairies, poultry and other markets.

Chattleton said following a three- to four-year period when conversation about agriculture was dominated by discussion of headwinds, the pandemic highlighted the sector’s resilience and provided an opportunity for managers to display their ability to manage risk.

He added that while many pensions and sovereign wealth funds invest in agriculture through vehicles that appear similar to funds but function more like separate accounts, Tiverton has raised capital for which it has full management discretion.

Tiverton’s investors have historically included high-net-worth individuals, insurance companies and others Chattleton described in 2019 as unnamed “leading real assets focused LPs”.  

The $3.58 billion Santa Barbara County Employees’ Retirement System committed $15 million to Tiverton AgriFinance II in January, according to a meeting presentation from Hamilton Lane earlier this month.

The bigger pools of capital in the market, Chattleton said, have been brought back into ag in part by the success of firms that have achieved higher returns through integration of processing assets and technology whereas strategies previously focused more on land. Duration in the market and demonstrated returns are valued more than anything by such investors interested in fund commitments, he said.

Tiverton’s debt strategy focuses on originating first and second-lien real estate and operating loans of between $5 million and $75 million to ag producers. Its equity strategy includes minority and majority growth equity and recapitalization investments of between $5 million and $50 million.

Those investments have included participation in a $5 million Series A in 2018 for Garner, North Carolina-headquartered data analytics software provider Growers Holdings.

Chattleton said Tiverton has remained active in equity and debt markets but declined to share any additional detail about the firm’s equity investments. He said its credit strategy has remained more active in recent years, adding that the approach has recently benefited from the fact many ag producers’ access to liquidity remains constrained and traditional borrowers appear to be getting less patient.

“If there is an issue, not only are they [lenders] trying to get rid of you, nobody wants to take you on,” he said. “There are situations that are more sizeable and of a higher credit quality than there have been at any time in the last five or six years.”