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Merricks Capital launches agriculture credit fund

The vehicle aims to raise A$500m in its first 12 months, providing loans of A$10m-$150m to counterparties across a variety of commodities.

Private debt fund manager Merricks Capital has launched its first vehicle dedicated solely to lending to the agriculture sector.

The firm is aiming to raise A$500 million ($389 million; €322 million) for the fund within its first 12 months, with the vehicle set to provide loans of between A$10 million and A$150 million to counterparties.

Loans will be “backed by hard assets,” the firm said in a statement, and will target sectors including dairy, horticulture, livestock, cropping, forestry, cotton, food processing and supply chain infrastructure.

The firm said it had identified a funding gap of around A$7.5 billion per year in Australian agriculture, and its active involvement in agricultural lending to date through its other funds provided it with the experience to increase its focus on the sector.

Agri Investor understands that Merricks Capital has ambitions to increase its exposure to agriculture lending to as much as A$1 billion within the next 18 months, inserting itself as a significant player in agricultural debt markets Down Under, which have traditionally been dominated by the country’s major banks.

The firm hired Dan O’Donoghue as head of agribusiness in August 2020 with a remit to focus on the origination of investment opportunities and the deployment of debt capital into the sector.

Merricks Capital said: “Our loans are focused on helping farmers and the agriculture supply chain grow to meet the opportunity. With limited competition outside the $70 billion loan balance sheet of the commercial banks we consider there is a significant opportunity to deploy alternative credit and achieve strong risk-adjusted returns through our asset-backed investment philosophy.

“This fund is unique in that it focuses 100 percent on the agricultural sector and we are very excited to be launching with very strong macro tailwinds for the sector.”