Last Thursday: cocoa butter and direct investing

'I'd rather invest directly' one LP was overheard telling GPs at our latest ‘Last Thursday’ networking drinks, which attracted investors from the US and Europe and represented projects from Eastern Europe, Latin America and Australasia.

Attendees at Agri Investor’s latest  ‘Last Thursday’, our semi-regular after-work gathering in Mayfair, represented projects from Eastern Europe, Latin America, New Zealand and Australia, and investors from Europe and the US, resulting in wide-ranging discussion.

Here’s a few things you might have discussed or overheard had you come along…

One New Zealand-focused fund manager complained that the national election was stirring up the debate surrounding the potential sale of Lochinver Station to a Chinese conglomerate but he didn’t think it would have a lasting impact on foreign investment into the country.

A US insurance company investment manager, yet to make its first agri investment, was heard telling GPs that he was unlikely to invest into agri funds but instead wants to invest directly in order to maintain control over any investment; the fee structures and incentivisation of on-the-ground management did not match in many funds he had researched, he argued.

South America-focused investors argued that, while foreign investment was encouraged by local governments in several countries, it can still be an issue for the local residents and workers. It is constantly on their mind when considering new land purchases because they want the co-operation of the local community in their projects, but also to avoid “headline” risk.

The same two, a family office and investment manager, extolled the virtues of investing into the value chain – beyond the farm gate – as a means to really boost returns. “If you are growing cocoa, you should go one step further than just selling it into the commodity market, and make cocoa butter or sell the wool from sheep. That will completely change your margins,” the manager said.

Meanwhile a GP readying a $150 million fund launch said he ‘d planned to target only family offices for the first close, although was struggling to meet many.

Stay tuned for details of our next Last Thursday get-together.