Insight Investment is in the process of winding up its sole agricultural fund and plans to exit the asset class once the sale of all assets in the portfolio has been completed, Agri Investor understands.
The $230 million, 10-year Insight Global Farmland Fund invested in dairy, livestock, potato and row cropping assets in Australia, Chile, New Zealand, Poland and Romania. It sold its Australian assets – two cattle stations in the Northern Territory covering just over 550,000 hectares combined – for around A$70 million ($47 million; €43 million) at the start of February.
Divestment is expected to be completed later this year, a source familiar with the strategy said, ending Insight’s ag tenure. A second source said the Insight portfolio was being marketed as early as last year.
A spokeswoman for Insight confirmed the fund exit, saying in a statement that the timeline for its “eventual wind-up” runs to December 2021. “Following discussions with local agents and operating company managers, Insight has concluded that it is appropriate, in light of the scheduled timeline, that we start the divestment process now.”
The spokeswoman, however, stopped short of confirming Insight will exit the asset class: “While the wind-up of [the fund] reduces Insight’s overall exposure to farmland equity as an asset class, we will continue to consider all relevant opportunities.”
Insight attempted to follow up its 2011 vintage debut farmland fund, which closed in 2013, with a successor fund roughly between 2014-16, which ultimately failed. The asset manager then tried to raise an open-ended farmland fund in 2017, for which it recruited ag veteran Detlef Schoen, which also failed to garner sufficient investor interest.
The Global Farmland Fund was targeting returns of 10-15 percent according to the Clwyd Pension Fund’s 2012/13 annual report. The UK pension committed $8 million to the fund.
“If you were going to push people to get them off the mark [and invest] in a second fund, you would need to be able to demonstrate that there was a very high likelihood of getting the returns from Fund I, or at least getting the operating returns,” a third source familiar with the fund told Agri Investor.
The source added: “Investors may be forgiving of the idea that you don’t get your capital appreciation returns in the near term, [but would ask] what you were doing and [say] ‘If we stick with this for enough years, [we] want to see the annual operating returns.’ Let’s just say if the second fund didn’t get up, that would reasonably be interpreted as the returns weren’t enough to convince them of how things were going at that time.”
The Insight spokeswoman declined to comment on the reasons for the failed fundraising attempts in its follow-on funds. She also declined to comment on the Global Farmland Fund’s returns.
Another stumbling block for Insight’s ill-fated agricultural strategy proved to be the departures of key senior personnel from the farmland team.
Current chief executive and president of Westchester Group Martin Davies was head of farmland management investment at Insight between 2011 and 2014 – the period during which the Global Farmland Fund was raised and fully invested. Davies was followed out the door by head of farmland management David Beca in 2015, along with portfolio manager Eoin McDonald in 2017, who had joined the firm in 2013.
“The investors around that time and for some years before liked the fundamentals or principles of how agricultural funds could or should work, including in comparison to non-agri funds,” said the third source.
“But how many agri funds can demonstrate that they have invested, operated for a period, exited and met their intended investment returns? There are very few, if any, that have done that. The Insight team couldn’t claim any track record in saying they had invested, operated and exited. It was a case of ‘this is it,’ they couldn’t point to another successful fund so it was always going to be a challenge.”
Insight had total assets under management of $661 billion as of December 2019, according to the company’s website, and invests in a range of assets, including emerging market debt, global credit and bonds, among others.