Warakirri secures European pension as cornerstone for A$500m Farmland Fund

The Melbourne-based GP is targeting 10-12% returns for its new vehicle, building on the 2019 launch of its Diversified Agriculture Fund.

Warakirri Asset Management is seeking up to A$500 million ($386 million; €322 million) for a new Australian farmland fund.

The firm announced the launch of the open-ended Warakirri Farmland Fund this week, which the fund’s portfolio manager Steve Jarrott told Agri Investor would likely reach A$300 million to A$500 million in size within the next two to three years.

The fund, which is targeting a net IRR of 10-12 percent over the long term, is around A$100 million in size and has a cornerstone commitment of an undisclosed amount from an unidentified European pension fund.

Target assets for the vehicle include horticulture (nuts and fruit), viticulture (wine and table grapes), water entitlements and selected row crop farmland assets. The latter is a point of distinction from Warakirri’s existing Diversified Agriculture Fund, which has focused primarily on horticulture and agricultural infrastructure.

“This particular investment strategy has a slightly higher focus on land-rich assets, so can potentially include exposure to broadacre row-crop assets, alongside the horticulture and viticulture that we currently invest in,” Jarrott said. The new vehicle will not allocate capital to agricultural infrastructure as the Diversified Agriculture Fund has done, or to intensive livestock assets.

“The fund is for a different type of client, rather than those family offices, high-net-worth individuals and small superfunds that we have relationships with through our Diversified Agriculture Fund. This is more tailored to institutional clients, targeted at those institutions who perhaps aren’t large enough to commit to large-scale own-and-operate investments in agriculture themselves, but still want to access the benefits of the sector.”

The Warakirri Farmland Fund will also pursue a similar operating strategy to the Diversified Agriculture Fund, with the firm leasing properties out to trusted partners to operate them, described by Jarrott as “best-in-class, highly sophisticated tenant counterparties.”

“Covid-19 has probably opened some investors’ eyes a bit about agriculture [because] of the lack of correlation it has to a broad range of markets that were impacted by the pandemic,” he said, with Warakirri stating that it hoped to attract commitments from Australian superannuation funds as well as international investors.

“The strategy is quite simple and we’ve proven it in some ways with our existing fund,” Jarrott said. “We’re offering a product that gives [superfunds] a relatively low-volatility exposure to the asset class, which coupled with the tailwinds behind agriculture and interest in alternative assets generally has sparked some interest.”

Warakirri Asset Management has approximately A$1.8 billion in funds under management and manages more than 200,000ha of Australian agricultural land across five active agriculture investment strategies.