Asset managers SLM Partners and Impact Ag Partners have said they will launch a joint regenerative agriculture and carbon vehicle that will invest in Australia.
The SLM Agri Carbon Fund has secured a commitment from an unnamed cornerstone investor. The size of the commitment was not disclosed and SLM Partners co-founder and managing partner Paul McMahon declined to share the vehicle’s fundraising target.
The fund will acquire mixed farms in eastern Australia and implement regenerative practices such as rotational grazing, reduced tillage, cover cropping, integrating livestock with grain rotations, afforestation and environmental plantings of native vegetation.
SLM and Impact Ag Partners will also seek to establish carbon projects on their farms under Australia’s Carbon Credit Units program, which “is uniquely suited for this approach that will ultimately allow carbon to be a significant driver of return, alongside commodity production,” said a joint statement.
McMahon told Agri Investor: “What’s interesting about Australia is carbon markets are so developed there, as in land-based carbon markets, that you can actually underwrite carbon and make it part of the investment strategy for farming, in a way you can’t really do anywhere else yet.”
“We’ve done a bit of that already with our existing fund. We’ve generated and sold more than 1.6 million tonnes of credits over the last five years and we see great potential to do more,” he added.
The SLM Agri Carbon Fund will be closed-end and will target an IRR in the high single digits.
SLM Partners will provide the investment management and capital raising expertise to the fund while Impact Ag Partners will manage the day-to-day farm operations.
SLM and Impact Ag Partners have already secured a separate account from a European family office to implement a similar strategy as a precursor to the fund and are about to complete the purchase of two properties in New South Wales.
McMahon said the separate account was worth “more than A$100 million,” ($64 million; €61 million).
SLM Partners has more than $550 million in assets under management and Impact Ag Partners has more than $950 million in assets under management.