Proterra Investment Partners launches US-focused Fund V – exclusive

Proterra Investment Partners is fundraising for its latest farmland investment vehicle, Fund V, which will see the fund manager invest in US farmland assets for the first time.

Agri Investor understands that the vehicle, which is aiming to raise up to $500 million, is close to holding a first close.

The fund has already acquired two US farms, with its global agriculture team recently visiting the US to tour those properties and inspect other potential assets. Fund V is primarily targeting annual cropping assets in the Midwest but will also look at farmland in the Pacific Northwest and southern states, including Texas and northern parts of Louisiana, where it may be able to diversify the portfolio with cotton and other crops. It will not invest in permanent cropping assets.

Proterra Investment Partners declined to comment on the fund or its fundraising targets.

Fund V’s strategy will mirror those employed by Proterra in other countries such as Australia, where the team has built portfolios of smaller assets with scope for improvement into larger aggregations split across several hubs, growing a diversified range of crops. The team has generally steered clear of large-scale competitive processes to build its portfolios.

The US fund will partner with American farmers in need of capital, working with them and using local knowledge to acquire the underlying assets before leasing them back to operators.

Several farmers have been introduced to Proterra by Cargill, leveraging the firms’ pre-existing relationship, and the asset manager intends to partner with Cargill on its RegenConnect program, a voluntary initiative that aims to help farmers improve soil health and decarbonize their operations.

Proterra’s agriculture team has been investing in farmland assets since 2010, when it was part of agribusiness giant Cargill and operated under the name Black River Asset Management. Black River subsequently spun out to form Proterra Investment Partners in 2016.

Agri Investor understands that the original Black River team focused solely on investments outside the US to avoid any potential conflict of interest with Cargill’s US operations while it was the ultimate owner of the business. It has invested to date in Australia, Brazil, Colombia, Mexico and Paraguay.

Following the 2016 spin-out to form Proterra, any prohibitions on investing in US farmland were removed, with the team watching the market closely since then to find an entry point that made sense financially. The team felt it could find better relative value in other markets, but due to changes in US farmland values it has decided now is the right time to make a play in the US market.

Proterra has seen strong results from recent exits in Australia, securing more than A$360 million for its 40-farm Corinella portfolio in 2021 and well north of A$100 million for its Vaucluse aggregation in Tasmania last year. It has retained ownership of two other strongly performing assets in the country, which are the One Tree and Racecourse aggregations.