Food and agriculture-focused investment firm Red Reef Partners has raised $61 million from three investors for a vehicle with a $300 million target, according to a Securities and Exchange Commission filing.
Red Reef Farmland Opportunities I is accepting minimum investments of $20 million and secured its first commitment in early September.
The firm discloses limited information about its operations, but according to the LinkedIn profile of managing partner Suzanne Petrela, it was established in 2009 to build and manage customized farmland investment portfolios for institutional and ultra-high net worth investors.
Among the entities receiving sales compensation related to the fund is investment consulting services provider bfinance.
bfinance director Guy Hopgood told Agri Investor the firm’s research clients include public and corporate pension plans, sovereign wealth funds, healthcare plans and larger family offices, all of which have expressed an interest in agriculture.
Hopgood said the interest stems from the increased sophistication of LPs that have formalized what had previously been one-off investments, into more formal real asset allocations. The return of capital previously held within real estate and infrastructure funds currently nearing the end of their lives, he added, is also playing a role in driving demand for exposure to agriculture.
“Some are already agriculture investors who are looking to diversify away from the large groups that have a significant track record, and some are groups that are looking to essentially achieve some of the levels of return and yield they were used to in real estate and infrastructure.”
He added that bfinance’s family office investor clients tend to require higher returns than other investor types.
“They are naturally looking more for the agribusiness, agricultural PE side – it’s difficult with the real asset land ownership element, in a lot of cases, to get the returns that these groups want to target,” he said.
Petrela’s profile also notes that Red Reef focuses on agriculture and farmland in North America and has partnerships with Agri-Trend and Russell Consulting Group.
Inner Grove Heights, Minnesota-headquartered Russell offers marketing and financial advice to crop and livestock farmers in the US and Canada, and is owned by a subsidiary of farmer-owned co-operative CHS. Agri-Trend is a farm management software from New York Stock Exchange-listed Trimble.