Former PSP Investments managing director Antoine Bisson-McLernon says establishing multiple partnerships with local operators is the key to scaling up in a fragmented global agriculture market.
Scalability remains a key concern of investors examining agricultural investments, according to the chief executive of Canadian agri fund manager Fiera Comox Partners.
Antoine Bisson-McLernon, who spent seven years as managing director at PSP Investments overseeing the creation of its natural resources portfolio before founding Fiera Comox last year, told Agri Investor that the fragmented nature of global agriculture and variety of risk factors can challenge investors looking for the asset to have a significant impact on their portfolio quickly.
“You really need to think long and hard about how you are going to build scale in this business,” he said, acknowledging that the need for scale differs among investors but remains a concern he hears while fundraising. “If you are going to wait for a $400 million deal in agriculture, you are going to be waiting a long time!”
In response to that challenge, McLernon said, Fiera Comox has structured its strategy as a collection of partnerships with specialized local operators, the best of which often prefer a joint venture approach to working as a tenant or employee of an large investor.
Declining to identify specific partnerships the firm has created to date, McLernon said Fiera Comox is in advanced discussions with a number of such operators and expects finalize partnerships and begin deployment “very soon.”
“If you have the right partner on the ground, you can always find good value in pretty much every sector,” he said. “We’ve found some very good opportunities in areas that people thought were overvalued because there’s too much demand for it, and of course, we’ve found some very good opportunities that were [more] niche that people wanted to avoid.”
Earlier this month, Fiera Comox shareholder Fiera Capital Corporation announced that Fiera Comox’s open-ended agricultural investing vehicle had raised C$200 million ($157.2 million; €134.4 million) from a combination of institutional investors, family offices and high net worth individuals since its launch at the end of June.
McLernon said the firm expect to bring in as much as an additional C$300 million for the vehicle by the end of 2017.
The fund’s strategy targets row crop and permanent crop farmland as well as beef, dairy and other protein categories, in addition to a 20 percent allocation for timber investments, according to McLernon. For both agriculture and timber, the fund is entirely focused on the US, Australia, New Zealand, and some regions of Canada, he said.
“Land title risk is a big issue for us,” he said. “Our conclusion was that we could find better risk adjusted opportunities in more developed markets where you did not have that land title risk and where you actually had some interesting low-risk development opportunities.”