UK farmland trust eyes ‘mid-April’ IPO relaunch

The fund had received subscriptions from institutional investors, private banks and wealth managers, all of which were returned after the income trust's IPO was pulled from the market.

Capital Advisory Partners plans to relaunch its initial public offering for the Global Sustainable Farmland Income Trust in “mid-April”, after it was pulled from the market due to market volatility caused by covid-19.

CAP investment manager Sven Miserey told Agri Investor the firm decided not to launch the IPO on 26 February, “because a number of investors couldn’t focus during the moment of the launch – a lot of our investors were preoccupied by other things and didn’t have time to put their order in,” he said.

In order to maximize the offering for the UK’s first listed farmland investment trust, the firm would “come [back] to book build in mid-April,” he said.

“We believe it is in the best interest of investors to have the maximum attention from wider investors in order to have the largest raise. We’re probably going to be coming back after the 5 April,” said Miserey.

He confirmed the firm had received “strong commitments from a number of institutional investors putting in 10 percent [down payments], so we had about 45 percent that was subscribed like that.”

Following several days of market volatility leading up to the IPO on 26 February, CAP “decided to close the book and return whatever subscriptions were made on the offer and [decided] not call those that had subscribed,” Miserey said.

The investment manager added that the $300 million fund also attracted subscriptions from wealth managers, private banks and charities.

CAP had expected to be in a position to begin deploying capital in Q1 2020. The income trust will pursue a buy and lease strategy, targeting farmland on which fresh fruit, vegetables and nuts are grown, and will largely seek to avoid row crop farming.

The fund had expected to receive commitments of between $1,000 and tens of millions of dollars and will make investments ranging between $10 million and $50 million.

CAP is targeting a dividend yield of 2.5 percent, growing to 4.25 percent when fully invested. Over the medium to long term, the fund’s total return targets are 7-8 percent, which will be achieved through operational lease income and land appreciation.

It will invest in assets in the US, Europe, New Zealand, Australia and certain countries within South America.