The $74bn pension has entrusted AgIs Capital with $150m earmarked for US farmland, its fifth commitment to agriculture and timberland.
The Virginia Retirement System has approved the creation of a $150 million separate account to be managed by Hancock offshoot AgIS Capital.
It is the first time the institution has created a separate account devoted to the sector. A spokeswoman for VRS told Agri Investor that all of the capital is earmarked for investments in US farmland.
The $74.4 billion pension’s real asset investments, which also cover real estate and natural resources, are benchmarked to CPI-U+400 basis points.
VRS’s $9.4 billion of real assets investments accounted for 12.6 percent of the overall portfolio and produced 10.8 percent returns in the year to June, according to an investment review published then.
The pension’s spokeswoman said VRS has already made one other farmland investment, in addition to three commitments to timber. The institution has no specific allocation to the asset class.
VRS and AgIS representatives declined to comment further.
Boston-headquartered AgIS is an employee-owned private equity firm founded in 2013 as a spin-out from Hancock Agricultural Investment Group. Dedicated to farmland and related operating companies, the firm typically makes investments of between $25 million and $75 million on behalf of clients.
In March, president and founder Jeff Conrad told Agri Investor that the firm was focused on permanent crops including blueberries, wine grapes and apples.
In a commentary published early this year, AgIS wrote about how its strategy has evolved away from buy-and-hold leases on farmland towards a focus on platforms that integrate primary production, processing and marketing of food crops and products for US consumers.
“Integrating activities throughout a supply chain can enable agribusinesses to capture value by reducing the costs associated with transacting in the market,” AgIS said. “Integration enables companies operating in the sector to create value for consumers by extending the availability of perishable items or offering new or enhanced products.”
Additional reporting by Matthieu Favas