Farm Venture Launches New US$109M Ag Fund

April 11, 2018

Kiwi agricultural investment and management firm Farm Venture has launched New Zealand Pastoral Investments, a new ag fund with the goal of raising NZ$150 million (US$109 million).

The fund, which will be listed on the Syndex exchange, is unique as it is geared toward New Zealand institutional and wholesale investors and private equity funds looking to gain exposure to the returns generated by agricultural assets.

“The Farm Venture fund is unique in that it also lets in institutional and wholesale investors on the action,” said Ross Verry, CEO of Syndex, in a recent press release. “It is an innovative structure, responding to a strong demand for new models and products supporting wealth creation and growth.”

Under its structure, the fund has a set minimum capital investment of NZ$25 million (US$18.4 million), and has expectations of returns of 10 percent per year – broken down as 6 percent returns per year generated from operations after management fees and before taxes, and another 4 percent per year generated from an increase in portfolio value resulting from improvements in productivity and valuation increases. The fund is being geared toward New Zealand’s investors, and has a 20 percent cap in place on international commitments for the first tranche, said Tim Barrett, managing director of Farm Venture.

The fund will focus on building a portfolio based on “natural, free range, and pasture-based farming” according to the firm’s website. Currently, assets under contract include three dairy farms, another dairy and another beef, or two beef operations expected to be added to the portfolio within the coming 12 months. At that point, Farm Venture plans to diversify into additional natural food operations. With a patient eye toward identifying “assets with a good return with example historical operational evidence,” the firm states that it could examine up to 20 farms per year for consideration of investment.

Capital and Knowledge

New Zealand’s government has set a goal of increasing primary industry exports twofold to a value of $64 billion by 2025. However, to achieve this goal, the agriculture sector needs not only capital but investors that can impart the necessary knowledge to agribusinesses looking to grow.

“That capital shortfall needs to come from new participants in the agri sector from within New Zealand and globally,” Mark Heer, ASB general manager Rural, told the New Zealand Herald in November 2016.

With a strong history of 12 years of syndicated farm management, Farm Venture is an involved investor, integrating oversight to ensure best practices that will result in increased productivity, profitability, and a high level of environmental stewardship.

“Farm Venture provides support to the on-farm management team to ensure effective planning and implementation of farming practices as well as strong performance and growth. Investors will be kept well informed of our progress thanks to our strict reporting disciplines,” said Barrett. The on-farm management teams are also encouraged to invest in the fund for common alignment, to secure their future as the operational farmers for New Zealand.”

The fund’s tie-in with Syndex will also provide investors with a level of liquidity not seen from other ag investment models.

“The benefits to Farm Venture and its investors from utilising Syndex focus on administrative ease,” noted Verry. “Detailed reporting can easily be distributed to investors, and investors can access information and analytics around financial, operational and environmental performance all in one place, at any time.“

“The diversification, scale and low leverage of the fund, combined with the transparency and secondary market that Syndex delivers, means that this fund offers a higher level of liquidity than traditional agricultural investments,” said Verry.

-Lynda Kiernan 

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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