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NCH Capital farmland exit signals broader sales effort in Romania

A lawyer involved in one recent sale says NCH’s Romanian land holdings are too scattered throughout the country for a single buyer to acquire them, as was its preference.

NCH Capital’s decision to sell Romanian farmland assets in early March to FirstFarms was part of a years-long effort to offload assets in the eastern European country, Agri Investor understands.

The firm could sell as much as 50,000 hectares of Romanian farmland.

Kinstellar – a Central and Eastern Europe-focused law firm spun out from London headquartered Linklaters – advised First Farms, a publicly traded agricultural company headquartered in Denmark, on its acquisition of “a significant amount” of agricultural land in Romania from NCH.

Financial details were not disclosed. NCH declined to comment.

Razvan Popa, a partner at Kinstellar who coordinated the team working on the transaction, declined to provide additional detail on the transaction. However, he did tell Agri Investor that the sale to FirstFarms was not the first NCH has carried out in Romania.

“They were really early investors and the kind of returns they are achieving on these plots of land is really great,” said Popa. “They started to sell a couple of years ago after a good solid 10 years of appreciation. They are a fund, so at the end of the day they need to sell, right?”

Though his understanding is that NCH’s preference was to sell all its Romanian farmland in a single transaction, Popa said the fact that the firm’s holdings are scattered throughout the country means potential buyers are often limited to those already owning farmland in surrounding areas.

“It only makes sense to buy it for people that are in the area and have a larger piece of land, [who] are missing a plot from their puzzle and NCH has it,” Popa explained.

Real asset broker Brown & Co partner Adam Oliver told Agri Investor he is not aware of any large disposals from NCH’s land holdings in Romania over the last four years. This is the period during which he believes the firm’s preference has been to sell its entire portfolio in the country in a single transaction.

“Of course, four years of reality may have brought them to a different point: mainly, selling off piecemeal,” he said. “Therefore, this could well be one of their first major disposals.”

Kinstellar’s release identified NCH as being among the largest owners of agricultural land in Romania. Both Oliver and Popa said they understand NCH’s total farmland holdings in Romania total approximately 50,000 hectares.

Earlier this year, Oliver told Agri Investor that a reassessment of risk and returns available in other farmland markets was helping to drive increased interest in Romania among institutional investors.

Popa said that agricultural deals, including for processing assets and silos, have come to constitute the majority of his work in recent years. He explained that the gap in pricing for farmland of similar quality between Romania and Western Europe had helped to attract increased investor attention.

He added that although investors from France, Denmark and Spain have been among the most active, the acquisition of a 55,000 hectare portfolio by UAE conglomerate Al Dahra Group was the largest in recent memory.

Kinstellar acted as an advisor in another Romanian farmland transaction: Westchester’s acquisition of an approximately 30,000 hectare portfolio from Rabobank. Popa said this deal had been even more influential in helping bring increased investor attention to the country: “If Westchester can take a country risk on Romania, everybody can.”

New York-headquartered NCH has $3 billion in assets under management and an agricultural portfolio of at least 700,000 hectares. Its $1.27 billion farmland fund, which closed in 2007, remains among the largest ever raised for farmland.

Ag-related investments in its portfolio include Agroterra, which the firm describes as the top producer of soybeans in Russia; AgroProsperis, which offers supply chain services to farmers in Ukraine; and Vel Pitar, an industrial-scale bakery in Romania.