Australian fund manager New Harvest Investment Management is nearing a first close for its Indigenous Impact Investment Fund, Agri Investor understands, with seed commitments secured from Australian financial institutions and family offices.
The open-end vehicle is New Harvest’s first commingled fund, with the firm aiming to hold a first close on approximately A$150 million ($97.5 million; €99.3 million) before the end of 2022. It will then target a final close of up to A$500 million in the first half of 2023, according to market sources familiar with the fundraising.
The IIIF is a natural capital fund that plans to make investments in farmland assets that are complementary to those held by Indigenous owners in Australia. It aims to create equity partnerships with Indigenous operators to help them expand and improve their assets for the mutual economic benefit of both them and the fund’s investors.
The fund’s assets will then be run alongside the Indigenous-owned assets as a co-operative managed by New Harvest Asset Management, NHIM’s asset management company.
Its seed commitments to date mean that the fund is well on the way to its first close target, Agri Investor understands, with investors including a major Australian financial institution and family offices.
The fund aims to achieve economies of scale, reduce costs and improve efficiencies in Indigenous-owned assets by creating vertically integrated businesses in regionally focused hubs, in turn uplifting the value of both the fund-owned and Indigenous-owned assets, and creating more predictable and sustainable operating yields for the Indigenous-owned assets.
By operating assets in this way, the fund aims to provide higher returns to both groups than could be earned by operating the assets separately.
The IIIF is targeting returns of more than 10 percent for investors, comprising an estimated 4.5-6 percent from asset operations, 1.5-2.5 percent in value uplift from vertical integration and participation in the creation of Australian Carbon Credit Units, and 4-5 percent in capital growth and infrastructure development.
The fund is targeting investments in protein production (beef cattle and lamb), wool production, and dryland and irrigated cropping, and plans to undertake carbon sequestration projects and biodiversity improvement projects across its managed assets.
In the beef cattle sector, for example, a regional hub would consist of breeding, growing and finishing stations, with New Harvest-managed capital acquiring assets that complement existing Indigenous operations. If Indigenous owners held breeding and feedlot properties in a given region, for example, the fund could invest in backgrounding properties nearby and then operate them collectively with the Indigenous-owned assets to create a vertically integrated operation.
New Harvest Investment Management is an employee-owned asset manager headquartered in Sydney, chaired by Don Mackay, former managing director of ASX-listed cattle giant AACo and former chairman of the Red Meat Advisory Council.
The firm declined to comment on the fundraising when contacted by Agri Investor.