The stars seem to be aligning for a strong year of agri-related fundraising.
In the US last week, Paine & Partners made headlines for closing the largest agribusiness-focused private equity fund raised to date, ACM Permanent Crops closed its fund above target on $250 million, and an increasing number of US pension funds – such as San Diego County Employees Retirement Association – are making plans to boost real assets exposure.
Commenting on Paine & Partners’ $893 million fundraise, a source at another private equity firm was not surprised: “I think it’s great but it’s not especially surprising. The interest in food and agri is insane and this shows a real willingness to make commitments,” he told me.
That willingness is not just limited to North American limited partners or funds, either.
Take Australia, for example, where we’ll soon be bringing investors and managers together at our Agri Investor Forum in Melbourne. The country’s private investment opportunities have been attracting significant institutional interest, with a number of domestically-focused funds expected to close this year including SLM Partners’ Australia Livestock Fund, Australian Pastoral Fund and Laguna Bay’s diversified agri fund.
“Investors are a lot more open to discussion about livestock than they were three to four years ago,” said Paul McMahon, SLM managing director, noting the sector’s appeal had been helped by poor performance of the grains commodity markets and the stability of the livestock market. “The more sophisticated investors are now familiar with cropping and so are ready for the next thing.”
Investor demand has been particularly strong from Chinese and North American investors, according to Brian Healey, a partner at law firm Holding Redlich. Healey has been covering Australian agribusiness for more than 20 years and now spends the majority of his time working on the increasing amount of inbound investment. And he’s also starting to see European investors become more serious about agri, he noted.
“UK institutions have had a new lease of life when it comes to agri,” McMahon agreed. “The authorities and pension funds are much more interested than before.”
While it would be unusual for any source to be too downtrodden about his or her sector and related fundraising prospects, there is a contrast in sentiment compared to early 2014 when many GPs still bemoaned investors’ hesitancy to commit to and truly understand the agri investment sector(s).
Challenges still remain, but with the increasing availability of expert service providers, real assets research and data – and firms like Paine & Partners and ACM paving the way – it would be a surprise not to see some (more) big fundraising successes in 2015.
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