Sustainable Agriculture Fund reaps solid returns amid sale process

The Australian super-owned vehicle was put on the block by manager AgCap in March in an auction run by CBRE.

Aerial view of farms fields summer landscape

The Sustainable Agriculture Fund again recorded double-digit returns for the financial year at a time when its owners are seeking to divest the Australia-focused vehicle.

SAF, which has been run by Melbourne-based AgCap since 2009, delivered a full-year return of 18.7 percent after fees and tax – a performance it attributed to both strong cash returns and capital growth. Net farm profit excluding capital appreciation stood at A$9.8 million ($7.8 million; €6.6 billion), topping four years of continuous growth to beat fiscal year 2016’s A$8.8 million.

“While global grain prices have been low, winter crop yields were high and beef production and prices combined to provide a stellar result for SAF’s King Island Aggregation,” the company said.

The fund owns 17 farms over five aggregations spread across New South Wales, Victoria and Tasmania, covering 24,000 hectares of land. Its backers comprise Australian superannuation funds AustralianSuper, Australian Catholic Super, Mine Wealth and Wellbeing, the University of Melbourne and Christian Super, with AMP Capital also invested in the vehicle.

Despite the sturdy performance, those investors are now looking to sell the fund, a process AgCap kick-started on their behalf in March by mandating CBRE to lead the process.

“The decision to put the assets on the market was a unanimous decision by all investors and will provide an opportunity for all investors to realize the value achieved by the strong investments made on each of the farms to increase productivity,” the firm said then, adding that it would also provide prospective purchasers with an opportunity to “benefit from the next phase of growth.”

Last August, SAF distributed A$10 million to investors, while anticipating that some of its LPs would likely be looking to exit. “We have supportive foundation investors that would like to remain and indeed grow their investment in SAF. However… other investors, for their own internal reasons, have asked us to test the market,” chief executive Martin Newnham commented at the time.

The same month, it emerged that AgCap was looking to raise an additional A$220 million to expand SAF’s portfolio. The firm has deployed more than A$145 million since being appointed to manage the fund.