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Report says agri funds have attracted $3.9bn this year

Agriculture has attracted more overall capital, with commitments funnelled into fewer funds.

A report looking at how private equity was allocated to funds focused on natural resources has found that capital raised by agriculture and farmland funds this year has already matched the $3.9 billion raised in that asset in 2014.

Timberland on the other hand was reported to have brought in $1.1 billion so far, compared to $1.9 billion by the end of 2014. The biggest proportion of funds in both classes focused on North America.

The agriculture data, which were put together by data provider Preqin, includes funds for investments in agribusinesses such as agtech, life sciences and food processing, a Preqin spokesperson told Agri Investor. Agricultural waste and biofuels fall instead under their energy category, alongside oil and gas.

The Preqin report also said that more capital had been pooled into a smaller number of funds this year. In 2014, 17 agri funds had raised a total of $3.9 billion, while the same figure has been already been reached through the nine funds that have closed so far this year. The report also pointed to the TIAA-CREF Global Agriculture II fund as the single biggest private equity financial vehicle, closing at $3 billion in July, $1 billion more than TIAA-CREF Global Agriculture I closed on in 2012.

The fund had aimed to close at $2.5 billion, but attracted more from its 20 investors, which include AP2, the Cummins UK Pension Plan, the Environment Agency Pension Fund, the Greater Manchester Pension Fund and the New Mexico State Investment Council.

The data also shows that agriculture and farmland had attracted increasing funding since 2009, growing from the $0.5 billion invested that year to $3.9 billion this year. The exception was 2013, when overall capital fell to $1.5 billion.

In agriculture as in timberland, most of the focus has been on North America. Since 2010, 37 percent of capital invested in agriculture has been committed to funds focused on North America. By comparison, 27 percent was raised by funds focused on several regions, while Asia, Australasia and Latin America had attracted 11, 7 and 6 percent of the pie, respectively.

Timberland, which Preqin says suits those with a long-term investment horizon and may reflect increased allocations to the asset class amongst long-term funds such as pensions, shows less correlation than the fairly steady growth seen in agriculture. It brought in $1.1 billion this year compared to $1.9 by the end of 2014.

In 2006, 2009 and 2012 timberland attracted between $0.6 billion and $1 billion in capital, compared to between $2.1 billion and $3.1 billion figures attracted in 2008, 2010 and 2013, the year farmland and agriculture-focused investment fell sharply. Timberland saw its last high-point in 2008, when it attracted $3.1 billion.

Regionally, the data also showed that funds focused on North America have accounted for 59 percent of capital commitments since 2010, followed by Latin America at 19 percent and Australasia at 11 percent. Africa, Asia and Europe pulled in 2 percent each.