TRSL backs Apollo natural resources fund with $75m commitment

According to its deputy chief investment officer, the Teachers’ Retirement System of Louisiana has committed $75 million to Apollo Natural Resources Partners III, a vehicle that includes agriculture among its target sectors.

Maurice Coleman told Agri Investor the commitment was approved at the $21.05 billion pension’s December investment committee meeting. The fund, which was reported to have launched in April with a target of $4 billion, will also invest in other natural resource subsectors such as metals and mining and energy, Coleman said.

“It may have some ag business in it,” added Coleman.

Apollo declined to comment.

The previous fund in the series, Apollo Natural Resource Partners Fund II, surpassed an initial target of $3 billion before closing on $3.2 billion in September 2016.

At the time, market sources told Agri Investor the fund would look for opportunistic investments in ag, with a particular focus on inputs, processing, distribution or aquaculture investments with potential to meet return targets of above 20 percent.

According to a June 2016 report from Astoria Investment, a Mauritius-headquartered entity that was an investor in Apollo Natural Resources Partners II, that vehicle targeted opportunities in energy, metals and mining and agriculture. The report’s authors wrote that Apollo planned to employ investment approaches that included acquisitions, corporate carve-outs and distressed investments.

“In agriculture, Apollo funds have invested approximately $741 million across three transactions, which have generated an aggregate 186 percent gross IRR and 3.2x gross MOIC,” wrote the report’s authors.

Though Apollo’s flagship funds also invest in natural resources, the firm explains on its website, an incremental need for capital in energy, metals and mining and ag inspired the creation of a natural resources franchise that now has approximately $5 billion in assets under management.

“Apollo’s natural resources franchise benefits from: a dedicated investment team with deep industry knowledge; an extensive network of relationships across the energy, metals and mining and agriculture sectors; and an ability to create downside-protected portfolios across multiple natural resources sectors focused on delivering attractive risk-adjusted returns.”

In February 2017, Apollo participated in a $125 million recapitalization for Pinnacle Agriculture Holdings, an inputs distribution company it created in 2012 using capital from the first iteration of it Natural Resource Fund, which closed on $1.3 billion earlier that year.