LGIAsuper has committed A$112 million ($80 million; €71 million) to Equilibrium Capital Group’s newest US-focused fund.
The Brisbane-based superfund announced the commitment to the Controlled Environment Foods Fund, for which Equilibrium is seeking to raise $250 million, according to a US regulatory filing from March.
This month Equilibrium’s fund made an equity investment of an undisclosed size into Houweling’s Group, a greenhouse vegetable grower with facilities in Canada and the US. Equilibrium principal Dave Chen said at the time that the fund planned to double capacity at Houweling’s 30-acre greenhouse.
Commenting on the new commitment, LGIAsuper chief executive Kate Farrar told Agri Investor the superfund’s capital will be used primarily to support this expansion at Houweling’s, as well as to support growth at the fund’s four other assets in California and Minnesota.
The Houweling’s expansion will see 30 acres added to the greenhouse in Mona, Utah, according to an LGIAsuper statement. The facility was built in 2014 and the superfund described it as “one of the most sustainable greenhouses in the US.” It is co-located beside a large natural gas power plant connected to the national energy grid.
Houweling’s also owns and operates a 50-acre greenhouse in Delta, British Columbia.
Farrar explained that LGIAsuper was attracted to Equilibrium’s fund because of the “crossover between the more traditional way of thinking about investing with technology and digital disruption.”
This latest investment takes LGIAsuper’s allocation to agriculture to around A$350 million, Farrar said, with the fund seeing the US market as a “fantastic opportunity.”
“There’s about five times the average number of advanced greenhouse facilities in Europe than there is the US, so given the relative size of the US market and the clear indication from consumers there that they’re interested in fresher produce that’s delivered more quickly to stores, we think there’s a massive growth opportunity, and we really love that part of Equilibrium’s investment thesis,” she said.
She added that the ticket size was also a positive for the fund.
“For a lot of larger funds, an investment of this size isn’t big enough to move the needle, but for us it makes a big difference. We’ve found that by accessing mid-market opportunities, we can not only capitalize on our unique expertise in this area of infra and agriculture, but this size also fits perfectly into our fund and makes a difference to the return to our members,” Farrar said.
Farrar said that while the fund had an eye on overseas diversification, with two-thirds of its agriculture portfolio now domiciled overseas and predominantly in the US, it would continue to look opportunistically at opportunities in Australia.
LGIAsuper had A$71 million committed to the Blue Sky Agriculture Fund, according to its 2018 annual report, and the superfund also owns 100 percent of Mildura Citrus, an aggregation of three medium-scale citrus orchards in Victoria, a macadamia farm in Queensland, and is an investor in the North Queensland Livestock Exchange.
“We think water is a strategic asset for Australia and Australian farmers, so we think there’s a lot of opportunity to invest in water here. We’ve also invested in the beneficiaries of water, so for example in a citrus farm,” Farrar said.
“We know the agriculture sector pretty well. We opportunistically look for assets that will provide good outcomes for our members, but we do think that agriculture, if you get the right asset, is an attractive asset class in Australia.”
LGIAsuper currently has more than A$12 billion of funds under management in total.