Trigon Capital, the founding shareholder and manager of Russian agriculture firm Trigon Agri, has formed a joint venture with InvestAg, a UK-based agriculture investment manager, to launch agriculture investments into Eastern European Union countries.
Dubbed Trigon InvestAg, the JV has started fundraising for a private equity fund expected to close later this year and is also talking to institutional investors about handling separate account mandates to invest in the region, according to Henry Wilkes, CEO at InvestAg.
He declined to provide specifics on expected fund size or targets but said the fund life would be between nine and 12 years.
Trigon InvestAg will invest into arable farmland producing general crops such as wheat, sunflowers, maize and rape, and also into agribusinesses up the value chain, for example animal feed or seed production. “This will help the fund, or managed accounts, gain a more constant return,” said Wilkes.
Eastern European Union countries score highly on a risk-benefits basis due to low political and economic risk inherent in their EU membership; the union recently signed a new common agriculture policy which will keep subsidies for the region high and stable until 2020; and readily available water, according to Wilkes.
Trigon InvestAg has identified Romania as a country with particular potential after it joined the EU earlier this year and the JV plans to focus many of its investments there.
“It was very interesting when Romania joined the EU because there is a significant mismatch in pricing between the East and the West and several factors pointing to a convergence in farmland prices,” said Wilkes.