Kilter’s Australian water fund holds first close

The new fund held its first close last year, and will return water to the wetlands in years of more supply.

An Australian water fund held a first close on A$27 million ($20 million; €18 million) in November, beating its first close minimum target of $25 million, according to local press reports.

The Murray-Darling Basin Balanced Water Fund, set up last year under water and real assets manager Kilter Rural, is now raising another A$75 million with the backing of US society The Nature Conservancy.

The organisation provided a $5 million seed investment, while National Australia Bank has pledged $5 million in debt, according to an investment memorandum.

The Besen family and Charles Carnegie, the husband of former Google Australia boss Maile Carnegie, also made commitments, according to The Australian.

The memorandum also said the open-ended vehicle could have accepted oversubscriptions of up to $60 million in its first fundraising phase.

The fund will target permanent water rights in the Southern Murray-Darling Basin. It will return water to wetlands in years when there is water abundance, and ensuring water to farming communities in drier years.

The investment memorandum has targeted returns of between 5 and 8 percent per year before tax. Once the fund has raised $100 million it will be targeting returns of between 7 and 9 percent.

Management fees will be 0.85 percent of assets under management, which falls to 0.77 percent when the fund hits $50 million and 0.6 percent as the fund size rises above $75 million respectively.

Australian asset management firm Blue Sky Alternative Investments began targeting the A$1.9 trillion local superannuation industry last year with a fund offering exposure to mid-tier agri infrastructure, agribusiness private equity and water entitlements. Along with Blue Sky, entitlement owner and water provider Aware Water has also invested in water rights along the Murray-Darling River basin.