Taking stock: Listed agri

Many private equity funds have a 10-year tenure. In the world of agri, data on their performance are relatively scarce, but some investors do produce benchmarks tracking how the listed sector has fared over the last decade. One is the IAA 80, an index created by France’s Unigrains comprising 80 European agribusiness stocks. Looking back at the recent past, does it seem there is value in listed agri?

Over the third quarter, the IIA 80 progressed 1.5 percent. Not bad, but short of the performance posted by the broader MSCI index, which rose 2 percent. Over the last decade, however, listed agribusiness is cast in a more positive light. While European stocks at large are still below their 2007 level, anyone invested in the IIA 80 would have nearly doubled their money, with a particularly strong performance on the part of food stocks (compared with beverage).

The index currently looks more expensive than its generalist peers. It ended Q3 on a valuation of 14.9x EBITDA, compared with an average 10.7x for the Euronext 100, FTSE Lead 11 (15.6x) and Small 11 (9.3x). In recent months, however, such prices have not discouraged investors from favoring Europe over the US. While the US 60 has done better than the IIA 80 over 10 years, it has lost 4.8 percent since the start of the year.